[The last post in this blog series covered emerging authentication techniques in the mobile banking space. Now, we will take a deeper look at contactless payment solutions.]
Since the early 1960s, the magnetic stripe or the MagStripe cards have revolutionized the electronic payment (e-payment) industry for more than 30 years. Due to the lack of security features, Mag Stripes became vulnerable to identity theft, causing huge financial losses to both the customer and the banks. Then, in the 1990s, more secure Chip Cards (EMV Standard) disrupted the e-payment industry. Unlike Mag Stripes with static information, the Chip Cards encrypted the stored information, making them tougher to replicate. Advancement in technology and customers’ demand, especially millennials pushed the banks and the e-payment industry to come up with a more secure and innovative payment solutions.
Near Field Communication (NFC) is a technology which enables two compatible electronic devices in close proximity (within 5cm) to transfer small amounts of data between them using a predefined set of communication protocol. Though NFC has got various applications, this technology is predominantly used in contactless payment solutions. The following are the top trending contactless payment solutions.
The contactless payment cards are just like the usual EMV Standard Credit Cards or Debit Cards but equipped with NFC technology. This card helps customers make quick and secure transactions at a POS, as it doesn’t require a pin input for smaller transaction amounts. Visa’s Pay Wave and MasterCard’s Pay Pass are the leading contactless smart card technologies spreading globally.
Many banks have added payment feature into their mobile banking application which employs NFC technology in the smartphones to communicate with the NFC-enabled merchant devices. Most of these payment apps use Host Card Emulation (HCE) technique which emulates the data transmission through a physical card to process the payment. The key advantage of this mechanism is that it uses additional security features like tokenization capability, which smartphones have to offer.
Technology advancements not only made the mobile phone smart, but also wearables like watches and rings. Smart Wearables come in various form factors such as fitness trackers, smart watches, and smart rings. Being one of the fastest growing markets, the smart wearable market has grown 18.4% since last year. Most of the Smart Wearables are enabled with NFC technology that powers most of the contactless payment solutions. These wearables either work standalone or synced with a smartphone to make payments.
Innovative Payment Solutions is one of the key areas in which banks must concentrate as they have a wide array of applications that drive transaction and experience at the retail end.
To Be Continued…
About Market Simplified: Market Simplified is a thought leader in handcrafting custom solutions by continuously innovating and simplifying finance. We have maximized the revenues of industry leaders like OptionsXpress (Charles Schwab), Currenex (State Street), MB Trading, Maybank Kim Eng, Kotak Mahindra Bank and National Stock Exchange of India by providing enhanced and sustained user engagement through Experience Engineering.
About The Author: Gokoulane Ravi is a foodie, technology enthusiast, and a developer turned marketer with more than 5 years of experience in the space of mobility. When he is not working, he likes to read, write, run and cycle.