Cashless Payment: The Future of Transaction
Technology is constantly evolving and advancing as we speak. It’s not that hard to see that technology plays a huge role in our lives such as artificial intelligence and automation. We’ve seen technology work in different industries, but did you notice that it’s changing the way we make transactions?
Traditionally, we usually pay for our purchases with banknotes, coins, or cards. All of these require actual contact between the seller and the buyer. It also takes time. Cards are convenient but still require authorization from the user. Not to mention, when sometimes the terminals go through some technical difficulties and delay the payment process.
Contactless payment can be defined as a secure method for people to make transactions with a debit, credit, or smartcard— also known as a chip card that uses RFID or NFC. Since smartphones and advanced technology have emerged in recent years, we’ve seen people use their phones to make transactions using apps such as Android Pay or Apple Pay.
The History of Contactless Payment
Payment methods have changed significantly throughout the decades. Before there were notes and coins, there was the barter system. The monetary system didn’t exist until 600 B.C. when the first currency was created in Lydia (now known as Turkey). Up until then, people bought things with items, coins, and anything they could get their hands on. As time passed by, people soon discovered it wasn’t exactly an efficient way to make purchases.
In 800 B.C. China began to use paper banknotes and soon Europe started using paper banknotes as well. In the 20th century, the first credit card made its debut in the UK. Not long, the debit card was introduced and continues to be a popular means of payment until now.
The development of the Internet influenced the world like nothing else. Thanks to the world wide web, ecommerce appeared and the ability to make transactions online became a reality. Electronic payment and mobile payment became a common way of life, making cash and coins a rarity.
How does contactless payment work?
To make a contactless payment, you simply tap your card phone near a point-of-sale terminal that has RFID of NFC technology. Due to the convenient nature and ease of transactions, contactless payment transaction sizes are limited.
People usually opt for this method when shopping for groceries or paying for their meals because they don’t need to enter any credentials. Despite the fact that they don’t need to enter any credentials, this method of payment is highly secure.
After tapping your card or phone near a point-of-sale terminal, each transaction goes through multiple steps of encryption, making it impossible for hackers or scammers to decode personal information. Also, the payment takes no longer than 3 seconds.
Benefits of going cashless
Contactless payment has its perks. It’s simple, secure, and most of all, it’s way more convenient for consumers and businesses.
So what’s so great about it? For restaurants and any brick and mortar business, it decreases waiting times which in return increases customer satisfaction. Cashiers spend less time fumbling for change and customers don’t need to go through their wallets as well.
Also, thanks to contactless payment, various apps have become popular and have launched various loyalty programs. Loyalty programs don’t just benefit businesses, but they also benefit users. Some apps have discounts and cashback for their users for encouraging them to use their services. A few examples are Starbucks, Liven App, and even Amazon Prime.
Drawbacks of going cashless
Going cashless has its drawbacks. Although it’s not many, it’s worth talking about. There are a few reasons.
First, paying with cash allows us to physically count our expenses. With cashless payment, we can lose track of our expenses due to its convenience and ease of use. Thanks to this, we’re more likely to overspend and go above our means.
Second, the older generation grew up with tangible means of payment such as gold and cash. So, the concept of paying without tangible items may seem strange. Most older people also don’t have a bank account or a smartphone, so for them to adapt to going cashless might be a bit of a challenge.
Third, cashless payments are limited to a certain amount. This is because making transactions with chip cards or smartphones require almost no credentials. Due to this, transactions are limited to $100 at most. However, it all depends on the bank who issues the card or application.
Before you go completely cashless
You might’ve made up your mind about going cashless but before you start leaving your cash at home, there are measures to consider. Since most of your personal data is on your gadget, it’s important to keep them secure. Make sure to use apps that are verified and established such as Google Pay, Android Pay, Apple Pay, and programs that have been acknowledged by established institutions.
Another thing you can do is prepare for the worst— the moment you lose your phone. Have a “Fine my Phone” app prepared and if your phone isn’t able to be retrieved, the next step is to lock your phone and delete all data on it.
To make it easier, the folks at Milkwhale made this simple infographic to help you understand what contactless payment is.
Andre Oentoro is one of the co-founders of Milkwhale, an internationally acknowledged infographic production agency. He helps businesses increase visibility on the internet with visual data and well-placed outreach campaigns.