CVS prescribes RFID for payment terminals

CVS is installing RFID-enabled terminals for processing various types of payment card transactions at its 5,400 pharmacy retail stores across America, according to Hypercom, the maker of the terminals.

Phoenix-based Hypercom announced this week that CVS has bought 12,000 of its Optimum L4100 terminals, which include embedded radio frequency identification readers that can capture customer account information stored in RFID tags built into contactless payment cards or key fobs.

O.B. Rawls, Hypercom's president, said CVS has piloted the terminals at stores in the Phoenix area and is starting to roll them out nationally. The terminals have been configured to the retailer's specifications and can accept magnetic swipe cards and smart cards in addition to the contactless cards and fobs, Rawls said. He noted that the RFID capabilities are designed to decrease the time customers spend waiting in line to make purchases.

Although Rawls wouldn't disclose the value of the contract with CVS or even how much the terminals cost on an individual basis, he said the RFID technology typically adds about US$100 to the price of each machine.

CVS didn't respond to numerous requests for comment about the planned rollout. As part of Hypercom's announcement, Karl Taylor, the retailer's CIO, singled out the RFID capabilities while saying that CVS chose the L4100 because of its "advanced functionality."

Sara Shah, an analyst at ABI Research, said she expects more retailers that operate small, specialized stores to follow CVS's lead on RFID.

"It doesn't seem to be on the radar screen of larger retailers like Wal-Mart," Shah said. "But it makes sense for smaller retailers like convenience stores and fast food restaurants, or any place where the customer doesn't want to spend a lot of time in the store."

Mike Witty, an analyst at IDC, said the rollout at CVS is an interesting project. But it isn't really a big deal in the overall development and adoption of RFID, he added.

"It's not RFID in the supply chain like Wal-Mart is doing," Witty said. A handful of retailers are experimenting with terminals designed to facilitate payments by customers, he noted. "But it's not the breakthrough in RFID that folks are looking for."

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