What is contactless payment?

Contactless payment is a common form of payment and as technology advances it is only going to become more common. We are seeing it today with not only our credit and debit cards but also with our devices like smartphones. It is becoming more and more common and if you do not accept it you might want to start thinking about changing that.

For the most part the technology is very simple. A RFID antenna is embedded in a card or a device is equipped with Near Field Communication (NFC) technology. A reader on the POS terminal will receive the information from the card or device when the two are placed in close proximity to each other. No signature or PIN is required and it is believed that it cuts the amount of time it takes to complete a transaction in half.

The earliest forms of contactless payment came in the service station industry. Mobil introduced the Speedpass in 1997 for use at their gas stations. The technology is still in use today even after Exxon bought Mobil and has even expanded to an app. The technology gained acceptance when the fast food giant McDonald’s implemented it. It was even introduced to sit-down restaurants when the UK-chain Eat implemented it in 2008 a year after the first contactless cards were introduced. Since then numerous other stores ranging from the common like Burger King, KFC, Subway and the UK drug-store chain Boots have implemented it among others.

Most major banks also issue cards with RFID antennas. The first was the Barclaycard in the UK in 2007. Since then there are nearly 60 million cards in circulation worldwide. NFC technology was the next step when it debuted in 2011 with the MasterCard PayPass and the Visa payWave which could be incorporated into a phone. In more recent years it has been incorporated into wearable tech further making a smartphone a one-stop-shop when it comes to the payment industry. This has helped to make new payment methods like ApplePay, Samsung Pay and others become not only more viable but in a way to become a standard method of payment.

Other entities also saw value in this technology. The Oyster Card was unveiled for use on the transportation network in London in 2003. Since its implementation congestion in stations has been reduced and some ticket offices have even closed due to a lack of usage since riders can refill their cards over the Internet. Many major metropolitan areas have in the years following implemented the same thing. NFC technology has also been included when London introduced it in 2014.

This technology is not perfect. In many cases there is a limit on the amount that can be purchased and in some cases a customer may only be able to use it a certain number of times before they are asked to enter a PIN number. For new EMV cards contactless payment will not work until a transaction is completed using the standard method.