In this era of instant gratification, it is not surprising that purchasing groceries, buying last-minute gifts, taking the train, and other similar financial-related activities have become much easier and faster. Thanks to contactless payment systems, all you need to do is tap your credit card, debit card, or pre-paid card, and you’re good to go. Gone are the days of having to wait for the cashier to swipe your card and waiting a little more for the transaction to be approved. Research by Gocompare.com suggested that 22% of UK consumers expected to make a contactless payment in 2014, but some have been reluctant to embrace this new way of dealing with transactions - in the same survey 46% of respondents felt that the risk of fraud was a key concern.
How do contactless payments work?
Contactless payments make use of near-field communication (NFC) technology, which allows data to be transferred within a very small physical range. Using NFC, contactless payment transactions are done much faster as the connection between two devices can take place almost instantaneously.
Contactless payments also have the advantage of being more secure than other technologies such as Bluetooth. This is due to necessary proximity of the two devices – the device accepting the payment and the device making the payment. This lessens the risk of other devices in the area interfering with the signal of a specific transaction.
Another advantage of contactless payment technology is that it can operate even if the device used for paying is not powered. This is the case with credit cards; and with mobile phones equipped with NFC, they can still be used to make payments even if turned off.
Mobile phones and contactless payment technology
Contactless payment technology has been integrated in mobile phones as early as last year. These mobile phones include the Galaxy range of Samsung phones as well as the Sony Xperia Z1 and SP. To use these phones to make contactless payments, they have to be linked to a prepaid account, which must then be topped up. The maximum amount depends on which bank the account is hosted.
While those two brands have been using NFC for some time now, mobile phone payments has not really taken off. Now, one of the biggest – if not the biggest – brands has joined the bandwagon. Apple is known to have resisted integrating NFC in the iPhone even though they have patents related to the technology and that their competitors have long embraced it.
With the release of the iPhone 6 and iPhone 6 Plus, however, Apple has shown that it has had a change of heart: contactless payment is now possible.
With the introduction of Apple Pay and the already existent Touch ID, Apple is looking to charge full steam ahead in the contactless payment niche; and we know that when Apple sneezes, the rest of the mobile world catches a cold. With Apple’s entry into the niche, analysts are predicting that a surge in mobile payments is bound to occur.
Apple Pay is likely to change our lives as it offers more convenience and more security with its Touch ID feature. In addition to the default security of NFC devices (the proximity), Apple Pay requires the user to have the user’s finger on Touch ID to complete a transaction.
While the system has not been rolled out yet and exact details have not been revealed, we do know that Apple Pay should be out this month. It has also been rumored that Apple is in talks with MasterCard, American Express, and Visa.
Conclusion
With more mobile phone manufacturers entering the contactless payment scene, it is only a matter of time when we won’t need to carry any cash. The only question is how quickly retailers will adopt the technology and offer contactless payments as an option to their customers.
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