U.S. Bancorp tries contactless technology

On May 28, I wrote a piece on the future -- or potential lack of future -- of contactless payment technology. Based on a report by Javelin Strategy & Research, it looks like the collaboration between credit card payment networks, issuing banks, wireless carriers and merchants may not quite come together. Additionally, a Gartner analyst told me there just isn't enough demand for contactless right now to justify the switchover. He said the process is being rushed, but needs to happen very gradually and will work best with small value purchases.

U.S. Bancorp must have been listening. Rather than pushing complicated mobile contactless technology, the bank recently began offering contactless debit cards to customers in four states. Once consumers become familiar with contactless cards, they are more likely to embrace contactless mobile technology, the Gartner analyst said. Plus, that gives merchants more time to decide if it's worth investing in accepting contactless payments.

U.S. Bancorp currently is issuing the cards in California, Colorado, Missouri and Utah, and is working with a company to install 400 contactless card readers on vending machines around Denver, the market in which they expect contactless will do best.  

I think starting with vending machines is a great idea -- so few people carry cash and change around anymore, and consumers will be more likely to use one of the machines if all they have to do is tap their cards. But when will vending machines start carrying things healthier than Ding Dongs and Hershey bars? That's a whole 'nother question.

See related: Contactless payment cards raise security, privacy concerns, consumer groups say, Next generation multimedia credit card unveiled, Cell phone + credit card = Yak, wave, buy, Contactless credit cards floundering, Experts say RFID hacking easy, Wave for ride on NY-NJ public transit