Micropayments Get Smart: Online Debit & Chip --- A Winning Combination?

1 Introduction 4

2. What is a Micropayment? 5

• 2.1. A Brief History of Micropayments 5

3. Debit Cards - The solution to a problem we didn't know we had�c 6

4. Why Card Based Micropayments Cannot Work Now 7

5. Wal-Mart Vs MasterCard & Visa International 8

6. The Future's Smart (AKA: Smart cards 101) 10

• 6.1. History 10
• 6.2. Architecture and advantages 11
  • 6.2.1. Storage Capacity: 11
  • 6.2.2. Heightened Security: 12
  • 6.2.3. Processing Power. 12
  • 6.2.4. Versatility: 13
  • 6.2.5. Off-line functionality: 13
• 6.3. Contact, Contactless and both 14
• 6.4. Typical Smart Card POS Transaction 15

7. Metcalfe's law 16

8. A Silver Lining? 17

• 8.1. Carrots 18
  • 8.1.1. Speed: 18
  • 8.1.2. Security: 18
  • 8.1.3. Large memory size: 19
  • 8.1.4. Longer card functionality: 19
  • 8.1.5. Decentralization: 19
  • 8.1.6. Potential synergies with other organizations: 20
  • 8.1.7. US Acceptance of alternative payment vehicles: 20
  • 8.1.8. Acceptance of cards as a medium: 21
  • 8.1.9. Fashion factor: 22
• 8.2. Sticks 22
  • 8.2.1. Fraud: 22
  • 8.2.2. The Wal-Mart Driven Debit Card Reissue 25

9. Big Fat Clouds (Barriers to growth) 26

• 9.1. No real reason yet 26
• 9.2. Merchant Apathy 26
• 9.3. Issuer Benefits? 27
• 9.4. Lack of Standards 27
• 9.5. Personal Privacy 28

10. So, what's going on now then? 28

• 10.1. Blue 29
• 10.2. Target Visa Smart Card 29
• 10.3. Speed is the Key? 30
  • 10.3.1. ExpressPay 30
  • 10.3.2. PayPass 31
  • 10.3.3. Visa Smart Cards 32
• 10.4. POSsibilities 33
• 10.5. A common standard 34

11. But what about micropayments? 35

12. Conclusion 39