Contactless card technology to speed up payment system

A credit card that doesn’t need a PIN number for payment seems illogical in the present scenario where every now and then banks keep alerting its account holders against the potential risks of frauds they are susceptible to. However, ignoring this reality, MBNA has recently introduced contactless cards for American Express and credits card companies like Mastercard, Visa, etc. These cards just require swiping at the specially erected terminals that display contactless symbol and payment is done immediately. MBNA has aggressive plans to issue contactless enabled cards to all its U.K. customers by 2012.

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There is mixed reaction on this development as the risk of fraud grows manifold. In current scenario, the effort to find out PIN number of a stolen card still poses a higher degree of difficulty, but once the importance of the four digit secret number is discounted, it will be a free run for credit card thieves. But, MBNA counters the argument by highlighting the convenience factor involved in contactless payment.

One contention is that carrying a contactless card is much safer and easier than cash in purses. The second argument by the promoters of this technology is that the cards they issue are low-value cards that limit the purchases to a maximum amount of £15. That’s how the recently issued American Express cards operate.

In addition, the importance of PIN number is not undervalued as is the general perception. The entry of the PIN number is mandatory on the first use as well as on the occasional basis to ensure that the rightful owner of the card is using it. In this way, a contactless card is as secure against threats as the current credit or debit cards.

The low value card is very convenient to use as payment of low-cost services like bus fare is easy as compared to the dedicated card that requires recharging. Despite the skeptic point of view of this technology, the change is happening fast in the sense that 12.9 million cards with contactless functionality had already been issued by the end of 2010 along with the installation of 52,700 terminals that accept these cards.

The technology appeals to the retailers most who have larger footfalls but slow modes of payment. Realizing this, the bank has installed the terminals for contactless cards at retail outlets in London, Manchester, Liverpool and Birmingham. Fast food chains are the quickest to adopt this technology and many of them have installed the terminals at their outlets.

Via: MBNA/CityWire