Contactless payment

Contactless payment

Contactless payment systems are credit cards and debit cards, key fobs, smartcards or other devices which use RFID for making secure payments. The embedded chip and antenna enable consumers to wave their card or fob over a reader at the point of sale. Some suppliers claim that transactions can be almost twice as fast as a conventional cash, credit, or debit card purchase. Because no signature or PIN entry is typically required for purchases under US$25 in the US and under £15 in the UK, some research indicates that consumers are likely to spend more money due to the ease of small transactions. MasterCard Canada says it has seen "about 25 percent" higher spending by users of its PayPass-brand RFID credit cards.[1]



Mobil was one of the most notable early adopters of this technology, and offered their "Speedpass" contactless payment system for participating Mobil gas stations as early as 1997. Although Mobil has since merged with Exxon, the service is still offered at many of ExxonMobil's stations.

The Co-operative Group, Boots, EAT., Pret a Manger, Stagecoach Group, Subway (restaurant) and AMT Coffee are among the retailers offering contactless payments to their customers in the UK. In July 2010 Little Chef became the first restaurant chain to adopt contactless.

Major financial entities now offering contactless payment systems include MasterCard, Citibank, JPMorgan Chase, American Express, KeyBank, Barclays, Barclaycard and HSBC. Visa PayWave and Mastercard PayPass are examples of contactless credit cards which have become widespread in US and UK. The UK (and the rest of the world) version of the contactless applications differ from the US one. The UK version has the capability of transacting offline, based on the limit stored in the application.

The first contactless cards in the UK were issued by Barclaycard in 2008. As of June 2010 there are approximately 9.6 million contactless-enabled cards, representing 7% of all cards, in circulation in the UK, with Barclaycard and Barclays leading the roll-out with eight million contactless-enabled cards in circulation and 25,000 terminals in use as of July 2010.[2]

Telecom operators are starting to get involved in contactless payments via the use of near field communication phones. Belgacom's Pingping - Belgium, for example, has a stored value account and via a partnership with Alcatel-Lucent's touchatag provides contactless payment functionalities. In January 2010, Barclaycard partnered with mobile phone firm Orange, to launch a contactless credit card in the UK. Orange and Barclaycard also announced in 2009 that they will be launching a mobile phone with contactless technology.[3]


As with all payment devices, contactless cards have a number of security features. Contactless runs over the same chip and PIN network as normal credit and debit card transactions, there is a payment limit on single transactions and contactless cards can only be used a certain number of times before customers are asked for their PIN. Contactless debit and credit transactions are protected by the same fraud guarantee as standard transactions.

Under fraud guarantee standards US banks claim to be liable for any fraudulent transactions charged to the contactless cards. However, banks are not liable for the identity theft that the RFID card can encourage. Hence, this security issue remains the most important concern to the end user.

See also


External links

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