Exploring Digital Wireless Payment Systems

• 22 April 2017 | 1083 Views | By Mint2Save

Consistently successful in limiting paper money to nil, payment fintech is the new venue. Inclined towards making payments quick and error free, wireless payments, aided by dynamic fintech solutions, is the need of the hour.

Gone are the days when money was all about the pocket and bank account. In this digital age, we carry money in whatever the way we want. From smart plastic credit and debit cards that go wireless to smarter contact less phone payments, money has elevated itself from mere pieces of paper to 0’s and 1’s of digitalism.

In this article, we shall explore various digital payments systems, that are trending globally and are widely accepted by people all over.

NFC or near field communication applies to a type of technology existing on a chip or device and function between two or more devices such as 2 phones, a phone and a credit card terminal or a credit card. The NFC technology in the chip allows these devices to communicate by being in near closeness to each other. The two devices could transfer all sorts of information & transactions relating to a particular or multiple transactions. 

NFC is the technology that set aside for contactless payments. They are one and the same thing. Though the contactless payment system is more frequently used by banks and card issuers as to the ‘tap and go’ credit and debit cards. These payments includes credit cards and debit cards, key fobs, smart cards, mobile devices such as smart phones and tablets and other devices  that use near field communication (NFC), radio-frequency identification (RFID),  or Samsung Pay (MST) for the secure payments. Contactless payments are providing benefits to consumers and retailers in a similar way, in terms of higher levels of control and convenience for consumers and higher throughput for retailers.

In India, ICICI Bank expose the country’s first contactless mobile payment solution to allow its credit and debit customers make in store contactless payments by just using their smart phones near an NFC-enabled merchant workstation. This helps to improved convenience of ‘Touch & Pay’ as customers are no longer required to carry physical card or cash to pay in stores.

Similarly SBI Card has launched the sbiINTOUCH Contactless Debit Card and SBI Signature Contactless Credit Card for fast, safe and hassle-free payments at merchant outlets. Contactless payments use the near-field communication (NFC) technology provide users to make payments by waving or tapping the card same as of ICICI. Recently, SBI has around 5,000 such NFC-enabled POS machines in main cities as Mumbai, Delhi, Chennai, Kolkata, Pune, Ahmedabad and Bengaluru.

There are Millions of transactions are completed every day and as you can see this countless payments are widening day by day such as  you could see metro trains and buses fitted with tap and go systems and Uber and Ola cabs put NFC receivers in their cabs, just like the yellow cabs in NYC. Soon, we will be paying everything with our phones and NFC is the ticket to that future.

Why consumers want this technology?

1) Easy to use:

As, contactless payments are quick or fast. Transactions can be processed in one second with just a tap on your mobile phone. That can reduce queue times and make it easier to make your bus on time. It’s also helpful in that the same NFC technology can be used across a range of other functions – such as ticketing, unlocking doors and gates with an NFC key fob or clocking in to workplaces. It also, though, can cause the customer to spend more as paying is so fast and easy.

2) Security:

Contactless payments have security same as for credit card. Fraud or theft protection laws all apply and secure channels and encryption are used for sending credit card information and PIN numbers. If any high priced purchase or several purchases is done within a short period of time then the user is asked to physically enter her PIN number to make sure theft has not happened. Without entering PIN a stolen physical card can be used, So, it is less secured than chip-and-pin, but mostly because of the pin. 

3) Offers Variety of factors:

Contactless is found on cards, key fobs, smart phones, vehicles, or almost anything that can be transported with a person. When purposely tied to a smart phone like Google Wallet, so many features are now available that are impossible for a Mag stripe card or EMV. Remote deactivation, payment history and user-configured pin-protection are only some of the features.

4) Versatile:

It is very flexible as it covers a variety of different industries and services. This method of payment can be used for the purpose of mobile banking, for reserving restaurant seats and movie passes, booking train tickets, redeeming rewards and coupons and much more. 

Speedpass which came in 1997, is the first example of contactless payment. Mobil gas stations provided contactless payment devices that clipped onto a key ring. The customer waved the device over a labelled square at the gas pump and paid right away. At present, ExxonMobil still provide this service.

In US, the term contactless payments usually refer to the use of payment products at present supported by American Express (Express Pay) or MasterCard (MasterCard Pay Pass) and Visa Contactless.

Disadvantages of countless payments:

1) Lack of Security:

Although NFC transactions are certainly more secured than regular credit card payments, mobile phone hacking is now uncontrolled and the attackers are approaching with new methods to gain illegal access into users personal, social security and financial data, thus, this technology is not completely free from risk. This makes the whole system weak and insecure.

2) Acceptance.

Contactless cards are accepted at very less locations than mag-stripe. Consumers cannot leave home by their NFC competent phone, because they will certainly need a mag stripe to pay. There are development on dynamic basis to counter this issue, such as, introduction of new technologies such as tone tag and solutions like Soundpays.

3) Expensive: It might be too expensive for many companies to adopt NFC based technology, to buy and maintain related machines and other equipment. While many leading companies such as Starbucks have successfully built-in the technology within itself, thus, the small companies may find it difficult to maintain their existing turnover and improve profits.

Going wireless is the present and future of fintech. With the global economy on an innovation mode, big names in banking and finance industries have started to push themselves in catering masses with better services. In order to move ahead from the conventional, without comprising on the obvious needs of privacy and security, the wireless payment methods have established themselves as a vital tech.

So, now move towards contactless payment technology, ‘Speedy and Safe’.