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Paying by Waving

But are smart cards too smart for their own good? Developers of technologies that compete with smart cards argue that it’s precisely the complexity of those cards that will spell their doom in the marketplace. For such everyday applications as buying gasoline, smart cards may be impractical: they require new equipment and authorization procedures. “We’ve been hearing the pitch about smart cards for 10 years,” says Joe Giordano, a business development vice president at ExxonMobil. “But there isn’t a need for the technology unless it has a real benefit for the consumer.”

That’s what prompted Giordano to develop an alternative technology for streamlining the purchase of gasoline. Brainstorming on an airplane trip nearly 10 years ago, he sketched a simple payment idea on some cocktail napkins on his tray table. He envisioned a toe-size device that would hang on a key chain. “It needed to be durable, reliable, simple, and lightweight,” Giordano recalls thinking at the time. Wave it in front of a gas pump, and a customer’s identification code would be picked up from the device’s built-in radio transponder. A customer would no longer have to find her wallet, pull out her credit card, and swipe it through a reader. Before Giordano got off the plane, he had even come up with a name for this device: Speedpass.

Giordano successfully sold the idea in a series of corporate strategy meetings. Nearly six million people now use the Speedpass, and the payment system has been installed at more than 7,500 Exxon and Mobil service stations. Unlike the smart card, Speedpass has no onboard computer chip or memory. It consists of a radio transponder programmed to transmit a digital code that identifies its user. A radio receiver inside the gas pump constantly scouts the immediate airwaves for the presence of a Speedpass, and when it finds one, it simply picks up the code numbers that authorize payment from the customer’s credit card. (Similar radio tags are embedded in the FastLane, FasTrak, and E-Zpass units millions of U.S. motorists use to pay highway tolls.)

ExxonMobil is now taking this simple message to other retailers. Giordano, currently vice president of the company’s Speedpass Network unit, is signing deals with fast-food restaurants and grocery stores. The Speedpass is being tested in Chicago-area McDonald’s restaurants and at Stop and Shop supermarkets around Boston. At a McDonald’s restaurant, the reader is incorporated into the drive-through order box. At Stop and Shop, Speedpass readers are built into automatic teller machines in special checkout lanes. In addition, Giordano has signed a deal with Timex to build the devices into watches that will be available in 2003. The goal, he says, is to make Speedpass a “ubiquitous form of customer ID and payment.”

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