Contactless payments are steadily gaining popularity abroad, particularly in the UK, but can we expect to see this technology stateside anytime soon?
What is meant by Contactless Payment?
A contactless payment system is a new technology set up at the retail point of sale. We already use a similar type of this payment with debit and credit cards, but the new technology on the rise comes in the form of key fobs, smartcards and even your cell phone. The key difference is that contactless payment relies on RFID, or radio-frequency identification.
Smartcards have already become commonplace in Europe. These look like regular credit or debit cards but there is a major difference. Smartcards have integrated technology embedding in them with circuits. These make up a microprocessor that comes fully stocked with volatile memory. They can store data, process applications and provide identification authentication.
What's different about the RFID technology is that radio waves are used to transfer data from one point to another. In the case of contactless payments, the data is being transmitted from the form of payment (a card, cell phone, or key fob) to the point-of-sale (or the cashier).
One form of contactless payment we can expect to see here in the U.S is Google Wallet. This app stores all of your credit cards on your cell phone. Simply tap the phone at a point-of-sale that accepts Google Wallet and your payment goes through as simple as that.
Many chains are already set to implement this technology in their stores this year, so we can expect a lot of changes taking place in 2012. Consumers can even store their loyalty card information on their cell phone app, making it easier than ever to have all of your financial information in one place. But is that a good thing?
Contactless payment is another way of making our money more virtual than before. Some people already struggle with budgeting because whipping out the debit card is now second nature, so what are the repercussions of having virtual credit and debit cards on a cell phone?
It will also be a while before contactless payment becomes mainstream in the U.S, so many stores are not going to have the RFID system at their point-of-sale. You still have to enter a PIN number for purchases over a certain amount, so there's still the chance that someone could steal your PIN number and even your cell phone, giving them full access to all of your accounts.
What's more, not every credit card offers the smartcard or RFID technology. People wanting to get on board early can research which cards are already using the technology by comparing credit cards at moneysupermarket.
With any new technology, there will be kinks to work out, not to mention the fact that people tend to be resistant to change. Regardless of how you feel about storing your wallet on a cell phone app, contactless payment is the wave of the future, so enjoy those plastic loyalty cards and sign those credit card signature strips while you still can. Their days may be numbered.