Contactless Payments & How It Works?
What is Contactless Payments?
Contactless payment is a wireless monetary transaction in which the customer authorizes monetary compensation for purchase by pushing a security token near the vendor’s POS System. Famous security tokens for contactless payment include chip-enabled bank cards and smartphone digital wallet apps. Contactless payments may also be guided as touch-free, tap-and-go or closeness payments.
When goods or services are bought through a contactless payment, the method may then be referred to as a frictionless checkout. Recognizing the need for such payment methods, today, it is indeed, one of the quickest growing payment methods across the world. The Covid-19 pandemic along with social distancing measures, and health and hygiene concerns have played a massive role in its development recently and will further push its use. It has turned out to be the most fortunate form of payment mode as well.
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So lets get into the evolution of contactless payments
Evolution of Contactless Payments
Transactions throughout the earlier decade or two have expanded in leaps and bounds. In the 1960s, magstripe cards came into reality and people discovered it easy and simple to use a plastic card for dealings. For the next four decades, diverse kinds of cards offering discounts and offers came into being. Contactless was around since the 1990s but did not gain much engagement across the globe. By the year 2000 and late 2000, digital payment came into reality. Internet banking, NEFT/RTGS transactions became dominant among businesses and ordinary people.
Today the payment landscape has grown again with the upgrade in the latest financial technology which has resulted in amazing devices like POS terminals, mobile banking, QR code payments and much more like that. Contactless payment is one of the most promising modes of payment yet developed
Contactless payments are known for being secured because the customer does not share billing or payment information straight with the vendor. Instead, all transmission is encrypted and each purchase is tokenized with a one-time transaction number.
The adoption of contactless payment has been revved by COVID-19 and a passion for consumers to avoid person-to-person contact when making in-store purchases.
How does Contactless Payment work?
Near field communication commonly known as NFC is the technology based on which contactless payments operate. It is an upgraded version of the current technology known as RFID – Radio Frequency Identification. RFID has been in usage for a prolonged time for various applications like shopping malls, warehouses, bags etc which can be scanned. It is only just that RFID started to be utilised for contactless payments.
The two components – reader or POS terminal and the consumer’s payment device have to be nearby for it to function successfully. The radio waves from the NFC chip establish a connection and exchange encrypted data making the transactions quick and secured. A card or smartphone enabled with NFC can be utilised near the reader, usually 10 cm or less to make the payment or execute a transaction. This leads to the subsequent section which is about contactless payment cards
So what is NFC Payment?
NFC payments are contactless payments that utilise near-field communication (NFC) technology to swap data between readers and payment devices like Apple Pay and Google Pay e-wallets in smartphones and smartwatches or tap-to-pay credit cards and debit cards. NFC devices must be near together―typically less than 2 inches apart―to conduct these contactless payments.
NFC Payment Apps – Examples
Here we will consider the most secure and reliable NFC Payment Apps in todays market. Here are the list
Besides security, what other usefulness do contactless payments offer?
Contactless payments take somewhere between 30-50% shorter time than standard credit card payments and are over 60% quicker than cash transactions. This makes them a suitable fit for micropayments and different low-dollar-value purchases. Contactless payment methods are popularly used to improve throughput for public transportation turnstiles, parking garage checkout terminals and road tolls. Although the precise amount of time saved per transaction may be smaller than a minute, the minutes preserved can add up and remarkably reduce the time customers spend waiting in lines.