When paying with plastic, why swipe? Just wave

Visa is hoping to simplify the process of paying with plastic with a new payment technology it introduced Thursday. With the company's new "contactless" system, consumers need only wave credit and debit cards within a few inches of a reader to complete a purchase. And for purchases of less than $25, no signature is required.

The technology will be more convenient for merchants and consumers alike by reducing checkout times and lines, Visa executives said. It's also designed to be an easy alternative to cash for small purchases such as a soda or pack of gum.

"Our hope is that the contactless payment feature will drive added convenience and speed to consumers," said Niki Manby, vice president of market and technology innovation at Visa USA. "You no longer need to swipe or hand over your card."

But don't go waving your credit and debit cards around just yet. Visa must first convince merchants and card issuers to use new equipment. For merchants, that means purchasing new card readers. For banks, it means introducing special cards capable of transmitting account data via radio signal rather than magnetic stripe. So far, no card issuers are offering them, Manby said.

With 5.6 million merchants in the United States, Visa will need some time to phase out its old system.

"It's not something retailers will do lightly overnight," said Pennie Gillespie, a Forrester Research analyst.

Visa is not alone in the endeavor. MasterCard and American Express also are experimenting with contactless cards. MasterCard has been doing field tests in Florida, while American Express is doing trials in Arizona and New York. The companies are using compatible technology, so merchants can use the same card readers for all three systems. Merchants just need to install an extra bit of software to make it all work together, said Patrick Gauthier, senior vice president of new product development at Visa.

Visa and its rivals have some obstacles to overcome before the technology becomes more mainstream, Gillespie said. Not only must they convince merchants to buy new readers, they must assure consumers that the new-fangled cards are every bit as secure as the old ones in an age of identity theft and high-tech hacking.

"Security is a question," Gillespie said. "How easy is it for someone to interact with a wireless communication and pick up a number?"

Visa designed its system to be highly secure, with multiple layers of encryption and fraud detection, Gauthier said. Each transmission between card and reader has a unique code that cannot be reused even if it is intercepted, a key security feature, he said. In addition, consumers have no liability for fraudulent charges with the new cards as with the old ones, Gauthier added.

"Security is at the core of our business," Gauthier said. "We are fully confident that the platform we have developed is as secure as any form of Visa cards today."