Updated on: 03 Aug 2017
What is a contactless payment?
Credit or debit cards are using radio-frequency identification (RFID) or near field communication (NFC) for making contactless secure payments. How is this working? The card has a chip and an antenna embedded that enables consumers to wave it over a reader at the point of sale terminal. Contactless payments are made in close physical proximity; they are usually distinguished from mobile payments which can also take place on mobile phones, but mobile payments use broad-area cellular or WiFi networks and do not involve close physical proximity.
Most of the business owners claim that transactions are almost twice as fast as compared to conventional cash transactions, credit or debit cards. Because no signature or PIN verification is typically required, contactless payments are usually limited to small value transactions. The lack of signature or PIN verification also opens a small window during which fraudulent purchases can be made.
Contactless cards usage in Europe
Contactless card payment usage in Europe continues to explode as more and more merchants accept this form of payment, according to a new study by consulting firm RBR London. The company states that "Half of all European cards will be contactless by 2021", and it forecasts that the volume of contactless payments will rise to almost 25 billion in 2021, equivalent to 22 percent of all payments on European cards.
Contactless card acceptance is increasing at a faster pace than contactless cards are being issued. Last year, the number of contactless-enabled terminals in Europe increased 63 percent to reach 4.9 million. Currently, contactless payments can be made at 30 percent of terminals in Europe. Because of the fact that a lot of transport networks in Europe and big-name retailers accept contactless payments, consumers are getting much more used to the payment method.
This type of payments is also supported by both VISA and MasterCard, the biggest credit cards companies on the European market. Visa accounts for 61% of contactless card payments in Europe while MasterCard only has 37% of the market; the rest is filled by American Express and domestic providers.