As Contactless Payments Soar, Are the Days of Chip and Pin Numbered?

The chancellor of the exchequer, Rishi Sunak, announced that the limit on contactless payments is set to rise to £100. He said that this move is supposed to facilitate the opening up of the economy as people return to the high street by enabling people to easily spend for their shopping.

The Contactless Future

The main driving force of the adoption of this technology is not a health concern. It should come as a relief to many people that banknotes pose a very low risk for transmission of the virus.

The main driving force is convenience. All it takes is a tap.

Contactless payments use radio-frequency identification (RFID) or near field communication (NFC) and an antenna in order to carry out transactions with the point-of-sale (POS) terminal. The chips emit short distance radio waves that allow you to transact by simply tapping or hovering over the POS terminal that then picks up the signal and processes the payment.

Contactless cards have been around since 1997 when Mobil first announced its ‘Speedpass’ contactless payment system. The technology was further developed by Sony and Philips who went on to design the NFC standard. Further testing was done by different companies using the technology in different use cases such as transportation, shopping and restaurants.

These chips can be installed in a variety of devices and allow for even more convenience this way. They can be found on credit cards, debit cards, smart cards, key fobs, smart watches, stickers and smartphones.

Through tokenisation, users can store their banking details securely on their device of choice. iPhones for example use tokens and NFC chips to transact through the Apple Pay app.

The technology has come a long way and modern contactless cards use the EMV (Eurpay, Mastercard and Visa) standard to encrypt their chips. This is the same technology used to encrypt chip and pin cards. 

Therefore, contactless cards are just as secure as chip and pin cards. In fact, they may be more secure than traditional chip and pin cards by doing away with the magnetic strip that is vulnerable to attacks.

It’s Only a Matter of Time

Business owners would be wise to adopt the technology sooner rather than later. Contactless payment allows for a better customer experience, faster transaction speeds and additional payment options.

Currently, one of the biggest use cases for contactless payments is as stored-value cards in the transit system. This has reduced congestion and the need for exact change.

Any business that depends on throughput in order to maximise sales will benefit from this technology. Moreover, most EMV POS terminals already support both contact and contactless payments.

However, the biggest factor in favor of contactless payments is habituation. Imagine a world where you can pay for everything from your smartphone with just a tap. And then realise that this is already a reality: in the U.S there are no limits on contactless payments.

Handling cash is expensive, bothersome and prone to shrinkage. Contact cards are marginally faster, not completely secure and pins are a hassle. 

Contactless payments offer both convenience and security for both businesses and consumers. Plus, it’s cooler than trying to input your pin by hiding a POS terminal in your jacket.