The Emergence of Contactless Cards are revitalizing the Essence of Digital Payments

Banking CIO Outlook | Monday, June 17, 2019

Contactless payments are those produced by waving or tapping over a reader; the contactless device is generally a card or a smartphone that makes the payment.

FREMONT, CA: Swipe, dip, or tap? In the coming years, customers must make the decision more commonly. This is because contactless technology is anticipated to equip more than half of all fresh deliveries of credit and debit cards by the end of the century, the New York Times reports. But how are these cards going to operate? Are they secure?

The safety is the same as a contact chip card–it utilizes the same chip in the card, the same procedures for authentication and encryption as the chip card. Because the communication between the card and the terminal is wireless, some may be concerned about prospective signal interception between them. But contactless transactions require the card to be positioned within approximately two inches of the reader. Furthermore, the data shared between the card and the reader does not help create fake cards or fraudulent purchases online. In particular, dynamic one-time code is used to complete the transaction –information that is not of any use outside that one transaction. One of the main factors why customers and merchants prefer contactless card payments over typical EMV card reader operations is a faster buying experience. If a store or restaurant has no contactless capability, it is still possible to insert the dual interface cards into a card reader or swipe them with the magnetic strip.

By the end of 2020, consumers will have these products in their wallet, and this is happening now. It will ramp up in a more omnipresent manner by the end of next year. ABI Research, a market consultancy company, predicts that 2.3 billion contactless cards will be issued worldwide each year by 2022. Today, the most common wireless payment locations are coffee shops, fast food restaurants, and shops where you are likely to create a quick purchase of less than $30. Development in contactless payments will come from other distributors when they get fresh readers of EMV cards, almost all of which are contactless.

This will be up to the consumer to determine which methods in the years to come will survive and thrive. It's all about choosing for us. Ultimately, customers decide what to do.

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