Cashless Payment What It Is And How It Works.

We live in a time-poor society where convenience is everything

, so with technology advances now allowing for cashless payment it will only be a matter of time before the system is adopted nationwide, right? In the UK there are around 27 billion cash transactions per year; of these, around 80% are below 10 in value. The purpose of contactless cards is to streamline the process of these transactions by allowing consumers to pay for low value goods simply by scanning their cards via a touch point.

What it is and how it works

Contactless payment is a payment method that makes use of Near Field Communication (NFC). NFC can be built into credit cards, debit cards and key fobs among other devices. The purpose of the cashless payment system is to speed up the low value transaction process and make it more convenient some retailers go as far as to say that the cashless payment system is twice as fast as traditional cash, credit card or debit card transactions. Due to the fact that no pin or signature is required, cashless payment is currently limited to 20 per transaction (up from 15 per transaction prior to June 1 2012). The transaction is carried out by holding your card to a certified reader rather than inserting it into a chip & pin device. The technology has garnered the name contactless payment due to the fact that the card neednt make contact with the reader in order for the payment to be accepted; this is thanks to the NFC technology mentioned briefly above.

Potential benefits

There is a huge amount of potential benefits associated with contactless payment; the next section of this article will cover some of these.

As stated several times already, the biggest and most obvious benefit of the system is the potential for convenience and time saving. Actual payment takes less than a second and no authorisation pin or signature is required except for the occasional security check. It is worth pointing out that as mentioned above this technology is only used in transactions worth 20 or less.

The secured network is the same as the one used for Chip & Pin this alleviates many of the security concerns that one might have.

If widely adopted cashless payment should see a reduction in queues and queuing times.

There will be no need to carry around the correct change

It reduces the need to find cash machines in inconvenient locations

Contactless technology can be provided on regular debit and credit cards so there is no need to carry around more cards than usual.

Potential drawbacks

As with anything, introducing a new system with new technology is rarely flawless and there are some potential drawbacks in this case.

The biggest drawback for many customers is the fact that it may increase overall spend. Studies have shown that due to the ease of the transaction and the perceived low value of the transaction consumers actually spend significantly more with contactless cards without necessarily realising that they are doing so.

Another thing that could make keeping track of finance more difficult and one that may irk some is the fact that a receipt will only be given if requested. This is in opposition to traditional transactions where receipts are issued automatically.

Many of the above benefits will only take effect if cashless payment is adopted by the masses (both individuals and businesses). Research conducted by Mintel published mid 2012 indicates that take-up of the system has been slower than predicted with a mere 5% of brits having made a cashless payment, this is in contrast to the amount of people that have been issued with a contactless card being almost 3 times as many (14%).

Of those that have used the contactless system, only 43% had used it in the few days prior to the research taking place and the verdict on whether it was actually more convenient or not was far from overwhelming. More information on the Mintel Report can be found here http://www.mintel.com/press-centre/press-releases/860/only-a-quarter-of-contactless-card-owners-have-ever-made-a-contactless-payment

The future

Despite the fact that there are clearly some reservations regarding this

technology, introduction into the mainstream has continued. After a mixed reception at the Olympics, Contactless payment is now accepted on London buses and is expected as an accepted form of payment on the London Underground by the end of 2013.

This isnt all. Its predicted that by 2014 around 50% of smartphones will have built in NFC readers, effectively turning your phone into a digital wallet (among other things) and eliminating the need for credit cards, debit cards and loyalty cards; who knows, it may even render your physical wallet obsolete.

Make no mistake though, NFC is still evolving and it is likely to be a number of years before its complete potential is fulfilled, however the possibilities are exciting and it will be very interesting to see how it progresses.

by: Dan Barrowclough

POST COMMENT

Argentina: Old World Charm And Natural Beauty Tips On How To Make Tax Time Less Stressful For Both You And Your Accountant! Copper Jewelry - Fashions And Health Benefits Eat Thai To Stay Healthy And Keep Slim Familiar And Experience Bathroom Fitter Glasgow Company Cars Used By The Employees In Different Circumstances And Situations Algae Power And Ocean Energies Concrete Demolition In Los Angeles Use The Right Methodology And Approach Get Silver Earrings And Find Out Their Enduring Appeal Ski-nergy; Ski Resorts And Renewable Energies Grand Canyon Helicopter Rides And What To Expect The Eternal Debate - Can Solar Thermal Heating Panels Replace Oil And Gas? A Few Reasons Why Single Men And Women Register With Online Dating Websites