Visa has wasted very little time following AT&T, T-Mobile, and Verizon into mobile payments development and has already announced that it will be trialing a new system with the Bank Of America next month in the New York area.
The trial, which will continue until the end of the year, is the biggest step by the two companies towards a ‘digital wallet’ system and contactless payments. This innovative approach could one day become the main payment method for everyday purchases, revolutionizing the way we handle transactions.
The Evolution of Contactless Payments
Contactless payments have already been used in Japan for years and are nothing new to smartphone technology. In Japan, systems like FeliCa have been widely adopted, allowing users to make quick and secure payments with a simple tap of their phones. However, the rest of the world has been much slower in adopting this new technology and is playing catch-up. The integration of contactless payment systems in Western countries has faced various challenges, including security concerns, the need for widespread infrastructure, and consumer habits.
Small chips, known as Near Field Communication (NFC) chips, are installed into mobile smartphones. These chips allow ‘bumps’ with point-of-sale (POS) devices for your bank account data to be collected and your purchases completed. The ‘bump’ is more of a wave of your device near the POS system, making the transaction process seamless and efficient. This technology not only speeds up the checkout process but also reduces the need for physical cash and cards, enhancing convenience for consumers.
Global Adoption and Future Prospects
The global adoption of contactless payments is steadily increasing. In Europe, countries like the UK and France have seen significant growth in contactless transactions. According to a report by UK Finance, contactless payments accounted for 27% of all payments in the UK in 2019, a figure that has likely increased in recent years. This trend is driven by the convenience and speed of contactless payments, as well as the growing number of retailers and service providers accepting this payment method.
In the United States, the adoption rate has been slower but is gaining momentum. Major financial institutions and tech companies are investing heavily in contactless payment technologies. For instance, Apple Pay, Google Wallet, and Samsung Pay are becoming increasingly popular, offering users a secure and convenient way to pay using their smartphones. The ongoing trial by Visa and Bank of America in New York is a significant step towards mainstream adoption in the US, potentially setting the stage for a broader rollout across the country.
Moreover, the COVID-19 pandemic has accelerated the shift towards contactless payments. With concerns about hygiene and the spread of the virus through physical contact, consumers and businesses are more inclined to use contactless methods. This shift is likely to have a lasting impact, further entrenching contactless payments as a preferred method for transactions.
The future of contactless payments looks promising, with continuous advancements in technology and increasing consumer acceptance. Innovations such as biometric authentication, blockchain, and enhanced security measures are expected to further bolster the adoption of contactless payments. As the infrastructure expands and more businesses embrace this technology, the vision of a ‘digital wallet’ system becoming the norm for everyday purchases is becoming increasingly plausible.
Via Engadget
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