The company's PayPass system is designed to let holders of credit and debit cards tap or wave their cards in front of a PayPass reader to make a payment, rather than swipe the cards through a reader and signing their name.
The company hopes the speedier process, which MasterCard has been testing with a number of retailers in Orlando, Florida, during the past year, will replace cash transactions at quick-service businesses such as movie theatres, gas stations and fast-food restaurants.
One analyst predicted that MasterCard's move to expand adoption of the technology, and similar efforts at American Express, will push so-called contactless payments -- more common in Europe -- into the American mainstream within the next year or two.
"2004 is going to be an inflection-point year in terms of consumer awareness and availability," said Ed Kountz, an analyst at the Tower Group.
The PayPass cards contain a special microchip that transmits account details wirelessly, using radio-frequency identification (RFID), the same technology that Wal-Mart Stores and the US Department of Defense are exploring to keep better track of inventory and supplies.
American Express has developed a similar payment system, called ExpressPay, which uses a keychain fob instead of a card.
Executives at MasterCard are vague about the national launch of PayPass, and they refuse to discuss which retailers and card issuers will participate, in addition to which cities, beyond Orlando, the company will initially target. For the Orlando trial, the company teamed with Citibank, Chase Bank and MBNA to issue more than 16,000 PayPass credit cards.
Merchants in the trial include Chevron, Eckerd drug stores, McDonald's and Loews Universal Cineplex, each of which purchased special PayPass readers costing a few hundred dollars each.
The goal of the national launch is to build a critical mass of both PayPass cardholders and retailers, said MasterCard vice president Murdo Munro.
But if the Orlando trial is any indication, MasterCard faces a classic chicken-and-egg dilemma: consumers are unlikely to take an interest in PayPass unless enough retailers support the system, and retailers are reluctant to invest in PayPass equipment until enough customers use the cards.
Several McDonald's and Eckerd store managers that participated in the Orlando trial expressed disappointment in the technology because so few customers had used it.
Chung Tran, a manager of one Orlando McDonald's, said he'd seen PayPass used only about three times during the past year. "People are always asking what the heck it is," Tran said of the PayPass reader.
But Munro insists that the trial was a success, showing that PayPass cardholders used their cards more often and spent more than they had with their ordinary MasterCard credit cards, Munro said. Merchants also reported that PayPass saved time at the checkout stand, he said. "In general, people really liked using the cards."
