The future of contactless payments

When Mobil first introduced a tap and go card way back in 1997, few had any idea the revolution it would cause.

Indeed, it took until 2002 before the chip technology was first embedded in a bank card. Now, Visa payWave and MasterCard PayPass dominate as the preferred method of spending on small purchases.

That is especially true in Australia, which leads the world in usage of the technology with 59% of Australians admitting to making a purchase using tap and go. The next evolution may be just around the corner, with consumers able to purchase with the swipe of almost any item on their person.

How tap and go works

While the idea was big, the technology involved is small.

Contactless payment technology is based on a small chip and antenna lodged inside the card. In less than one third of a second, the chip will ‘talk’ to the retailer’s reader and the transaction is complete. For security, this can only be used for purchases under $100 before a PIN is required.

The relay of information is encoded with advanced cryptographic technology. And the banks are watching, ready to swoop if irregular spending patterns pop up.

So why stop there?

If the technology is just a chip? Why does it need to be in a card?

Contactless payment using only a smartphone already exists, although Australians have been slow to take up this method of payment.

Overseas, banks are issuing contactless tags, a fraction of the size of a conventional card and designed to be attached to phones. These tags could actually be attached to anything you like, allowing you to swipe using a handbag, purse or whatever you have saddled the tag up to.

It gets better

In Turkey, consumers are being offered even better ways to tap and go.

From 2007, the Garanti Bank was experimenting and trialling ways to incorporate the technology into a wrist watch. After gaining approval from MasterCard and forging a partnership with Austrian watch makers LAKS, the trials began. In 2010, the first fully functioning watch with a slide out chip that could be personalised like any bank card was ready for mainstream release.

LAKS is now delivering this technology to the world, with launches in Malaysia, India, Russia, the Ukraine and the United Kingdom. While this technology is still relatively in its infancy, it paves the way for chips to be installed in almost anything.

Stick with this technology

You might not have to wait for your payment device of choice to become tap and go ready.

In Germany, the ERSTE Bank released the Glue and Pay contactless sticker. With technology becoming so advanced, the bank has been able to merge the chip and antenna technology into an ultra-thin sticker that could go on your keychain – or whatever you desire. Consumers are currently able to use the sticker to tap and go for purchases up to 25 Euro.

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