What’s Next for Contactless Technology?

I take a look at what’s next for contactless technology, the convenient payment system that has exploded after being added to smartphones.

Everything Everywhere and Barclaycard announce contactless payment devices for summer 2011

Contactless Technology makes use of Near-Field Communication (NFC) to let the cardholders make payments for their purchases. This technology has been around for a couple of decades, but the COVID-19 pandemic has seen its exponential growth over the last couple of years. And just like the pandemic, contactless technology is not going anywhere anytime soon. Contactless technology is going to continue to be an integrated part of our lives for years to come, but what can we can expect from this field of technology? I take a look at What’s Next for Contactless Technology?

What is Near-Field Communication (NFC)?

Near-Field Communication (NFC) facilitates instant data transmission between local devices. Because NFC technology is based on short-range wireless communication, devices need to be relatively close to one another.

Radio-Frequency Identification (RFID) technology evaluates and verifies necessary information before processing the transaction. RFID readers are commonly used in security systems and for public transportation passes.

The communication and verification of credentials are vital for secure payment authorisation. Credit and Debit cards have unique codes and credentials which the NFC reads at the POS terminal. These transactions are super-fast and secure. These days, you don’t have to scan or insert the card into the reader. You just have to place your card on the contactless card machine and the payment will be authorised in seconds.

How Does Contactless Technology Work?

We should really call it Contactless Smart Card Technology since contactless technology is primarily based on the miniature computer chips in smart cards. These chips can communicate with compatible card readers through short-range wireless communication.

Unlike ordinary computer chips, smart cards have highly-sophisticated and secure chips and are constantly upgraded with the latest security protocols.

Pros of Contactless Technology

The benefits of contactless technology include:

  • Fast checkout
  • Highly reliable security protocols
  • No need to carry cash
  • Backing from trusted data security solutions
  • Easy to travel, buy tickets, and shop across the globe

What’s Next for Contactless Technology – Future Trends

Since the COVID-19 pandemic, SOPs have changed the way businesses communicate, more and more businesses have adopted the latest contactless solutions. The contactless payments market was an impressive $10.3 billion in 2020 and is predicted to reach $18 billion by 2025. Here’s what we can expect from this growing field in the years to come.

1.POS Terminals Will Dominate

We have already seen the rise of Point-of-Sale terminals, with businesses of all sizes across the globe adopting these tools. This is just the beginning. In the coming years, we will see increased use of POS Terminals at almost everywhere, including subways, public spaces, shops, and even vegetable and fruit stalls. With the growing confidence in the security features of smart cards, people are likely to say goodbye to cash.

2.Smart Phones Will Become Payment Terminals

Apple is set to lead the smartphone industry by converting smartphones into contactless payment terminals. This move will trigger competition between conventional payment providers and smartphone manufacturers.

Bloomberg has reported on emerging embedded contactless payment features with the iOS 15.4 update. This means we are set to see this development emerge in the near future, with this update due in just a few months.

A built-in NFC chip has been a feature of iPhones since the release of the iPhone 7. If Apple takes this massive leap, the future of third-party payment providers will be uncertain, because they might lose their existing customers who use iPhones.

3.Instant Buys and Relaxed Payment Schedule

The eCommerce industry is set to take advantage of exciting developments that will offer great benefits for sellers and buyers alike. Sellers will be able to attract potential buyers by offering instalment schedules instead of needing to pay 100% at the time of purchase.

4.Fast and Secure Crypto Payments

At the moment, crypto payments can be pretty complex, especially for beginners.  Just about every exchange has a complicated fee or commission structure. As a result, very few people fully understand the role of crypto wallets.

Many countries are looking to find ways to regulate crypto trading but this complicated situation may take some years to reach a practical solution. On the other hand, Visa and MasterCard are looking into establishing a secure connection between conventional and digital currency payments.

Final Thoughts on What’s Next for Contactless Technology

Contactless technology is rapidly evolving thanks to the massive global thirst for better financial solutions. This technology benefits both merchants and buyers. The number of third-party solution providers is on the rise meaning they have to be creative to stay up with the competition. It is always good to see positive competition leading towards out-of-the-box solutions.

However, conventional banking trends and central banks of many countries remain slow to embrace change. For instance, PayPal is still not operational in many countries because their central banks are hesitant to approve the terms of service. However, with COVID-19 pushing forward contactless technology and bringing it into the spotlight, we can safely assume that exciting new trends will replace conventional banking.

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