Contactless payments are one of those ideas that make instant sense—in theory. Instead of forcing people to stand in line, waiting to talk to/deal with a cashier, businesses can use a scanner that can read whatever card or phone is waved in front of it, and allow the customer to go on his or her merry way. It's a technology that the major credit card companies are pushing, but it's not without its growing pains, as the battle continues between security experts who want more a more open approach to device security and companies who seek to hide their methods of securing such devices.

Despite the issues surrounding contactless payment deployment, Visa has taken a significant step forward in designing its version of this technology by unveiling its newest product: the Visa Micro Tag.

As shown above, the Microtag is a small device meant to attach to a keychain. The Micro Tag uses Visa's payWave system to conduct and verify the actual transaction. No number is imprinted on the device, which, according to Visa, is one of the Micro Tag's security features. According to Visa's Micro Tag homepage, Visa payWave will only activate once the tag is within 1-2 inches of the scanner, which will then indicate that the appropriate information is being processed through the "secure" Visa network. Users making purchases under $25 won't even have to sign a receipt.

There are, however, some practical concerns standing between you and your insta-purchase keychain. There are currently a number of contactless payment systems in use from various credit card and mobile phone companies. This alone is likely to make any store wary of upgrading its scanners to any single contactless payment system until compatibility with the major players can be guaranteed. Security researchers have also raised issues regarding both how the credit card numbers are transmitted and the fact that none of the companies developing contactless payment systems are willing to allow independent security developers to examine their systems. For the moment, it's not even clear whether Visa uses an encryption algorithm to communicate with the scanner or if such data is transmitted "in the clear." The company web site has little to say on the matter, noting only that "Visa Micro Tag is very secure, protected with the same multiple layers of security as traditional Visa cards."

Contactless payments are going to continue growing in the US—it's too good a concept to ignore. The big battles, then, are going to be fought over who controls the payment networks, how secure they are, and how wide a variety of devices can be supported by a single scanner unit. Hopefully someone will also come up with a way to simplify the keyfob end of the system—I can imagine carrying one these devices, but I'm really not sure I'd want one for Visa, MasterCard, and American Express all hanging off a single keychain.