The magnetic tape on the back of your credit card begins to give up its white unconditional position in the market to the integrated radio chips. RFID-technology can dramatically change the usual method of payment that consumers use when buying goods or services. At least, supporters of the new technology hope so.
Contactless payments using a chip with built-in radio frequency identification (RFID) technology allow credit card holders to pay for purchases simply by holding a card two to five centimeters from the card reader. You no longer need to carry the card through the reader, there is no need to give it to the store employees, in other words, no more contacts of your credit card with unauthorized people.
If you’ve ever ordered food from Arby’s, drank morning coffee at 7-Eleven, or went to the cinema in Cinemark, you’ve probably already seen or even used that very contactless card reader. However, if you do not live in New York, Connecticut, Denver, Atlanta or in other places where American Express, Bank of America, Chase, Citibank, Key Bank, Wells Fargo and other issuing companies have conducted pilot programs for the implementation of contactless payments , you probably don't have a contactless card yet. In fact, only 7 million of the total number of Morgan Chase plastic card holders (90 million) use Blink cards (banking version of contactless payments).
“Do not let your location prevent you from receiving a contactless card. If you own a credit card from Chase and live, for example, in Utah, then just call the bank and ask for a card with Blink technology,” said the senior vice president of credit services. cards in JP Morgan Chase Scott Rho (Scott Rau).
To date, you will find about 30,000 places in the US where you can use a contactless card: from local cafes to such large snack chains like KFC or McDonald’s. However, the number of places where you can pay "in a new way" is quite small compared to the total number of outlets in the US (5 million).
According to Michael Friedman (pictured) (Michael Friedman), director of the department for studying new technologies at the Mercator Advisory Group (a company engaged in the payment market), the number of stores accepting new credit cards should increase along with the process of launching RFID technology on the market. . “The issuance of cards was fairly large-scale, and retailers were not far behind in scale. But there is still a lot of work ahead. I talked to employees of stores in Connecticut, where I use card readers for contactless cards, and their answers were very different. Some said that a third all transactions occur with the help of a new technology, while others said that they first saw a person using a contactless payment method, "said Friedman.
For sellers, the obvious advantage of contactless payments is speed, especially in places of large crowds of people — movies, fast foods, sports events, and public transport. It takes much more time to make payments with checks and credit cards with magnetic tape, which, in turn, causes long queues.
When paying by contactless card, payments for more than $ 25 do not require a signature, so you only need to bring the card to the card reader, which takes much less time. According to Elivira Swanson, director of corporate communications at Visa, they found out that the process of making a purchase using the contactless method is 25% faster than using cash. "This may not be very noticeable to the average customer, but for the fast food point there is a significant time saving, especially when the new technology is distributed to all customers."
Of course, the speed of transferring money is also attractive for customers, especially if they know what it is to stand in line in front of three or four customers signing checks. “You can stand there all day,” says Friedman, “But if these three people take advantage of the contactless system, your turn to pay will come much sooner.”
Everyone points out how Korea, Japan and other Asian countries are making extensive use of the new technology, and are surprised at the lag in the US. According to Elvira Swanson, it is difficult to compare the American and Asian markets, but if you compare this system with others, it was “the fastest way to bring new payment technology to the US market.”
A survey in 2006 of Generation X and Y members by the Market Platform Dynamics showed that more than sixty percent would refuse to use a contactless payment system because of concerns about the safety of their money. However, supporters of the new system say that the level of its adoption is likely to increase as customers realize that the potential for fraud is small.
Many people confuse the technology used in the contactless payment system with RFID technology, which in turn is mainly used to monitor stock status in warehouses. For this purpose, a radio signal is used that is transmitted over a wide radio channel at high speeds, thus it is possible to track stocks throughout the warehouse or store.
Contactless payment technology uses a radio frequency that can be compared with a weak FM radio station, whose radius of action does not exceed a few centimeters from the card reader. However, it is also called RFID or near-field communication (NFC).
In addition, each transaction must be deliberately initiated by the buyer and confirmed by the seller. Finally, the radio signal of each transaction is coded with its secret number, dynamically changing the password. “No one can take your number out of the air and use it again and again,” says Friedman, “It must be carried through a real reader.” As with any credit or debit card, according to the agreement, the card holder is not responsible for unauthorized purchases in case of theft or loss of a card.
Non credit cards
The most exciting new technology is its potential. MasterCard issued contactless PayPass bracelets with $ 25 in the account (which could be spent at special points in the stadium) to five thousand fans in New York at the Giants-Indianapolis Colts football game. Austrian watchmaker LAKS introduced the watch with the technology "Smart Transaction". In addition, many companies produce key chains with built-in contactless technology.
The Utah City Transportation Department is planning to apply technology on its buses serving Alta, Snowbird and other ski resorts in the canyons surrounding Salt Lake City. Not only the owners of the annual season tickets, but also all other skiers will be able to pay their way to the Little Cottonwood canyon, bringing their contactless card to the reader. For Utah, this approach offers a lot of benefits. “First, we will be able to accept payments on a contactless basis from season ticket holders,” said Justin Jones, a spokesman for the Utah city transport department. - In addition, it is unusually expensive for us that people take change, consider it, and put it in their wallet. If we can get rid of it, we will lower our costs. "
Recently, Visa, Chase, Nokia and Cingular joined forces to conduct tests at the Philips Arena in Atlanta. One hundred and fifty fans used their contactless technology-enabled mobile phones to purchase a ticket and download Atlanta Haws' game statistics with Thrashers (these phones used near-field communication). The test participants liked the idea of combining a credit card and a telephone so much that they were ready to use them for shopping outside the stadium.
Despite potential customer safety questions, Friedman (from the Mercator Advisory Group) remains optimistic about the use of contactless technology. "It is much easier and simpler than holding a credit card through a reader. Everything that is easier to use, everything that will help to overcome the line faster, ultimately, will be accepted by consumers," Michael Friedman is sure.