The future of contact and contactless card scheme vision looks very bright. For a faster, easier way to pay, just touch and pay in a beep. Paying with your contact and contactless card is quick and easy.
What is the difference between contact and contactless smart cards?
- Contact - The chip communicates with external devices through a direct physical connection, for example,
the card is inserted into a terminal.
- Contactless - The chip communicates with external devices using radio frequency identification (RFI) or radio waves, so no physical connection is necessary, for example. the card is "waved" in the proximity of the terminal.
The underlying technology for all of these contactless payment devices is the same. Built-in near field communication (NFC) antennas on newer smartphones are not suitable for contactless payments for two reasons:
- Smartphones equipped with NFC technology typically have an antenna range of one-two centimeters (cm) versus a payment standard requirement of two-four cm.
- Smartphones equipped with NFC technology typically do not have encryption between the NFC antenna and the smartphone's baseband processor.
Little more than a few years ago after the launch of Square, MPOS has redefined merchant card acceptance at the point of sale (POS),
by both rewriting the rules on who can accept card payments and vastly simplifying their means to do so.
Traditionally, merchants followed a lengthy process to enroll with a payment solutions provider to equip their store with proprietary terminal devices to read magstripe or chip cards.
Once installed, these POS terminals remained in a fixed location at the merchant premises, typically at cashier stations.
Software integration to the merchant's POS management system ranged from simple to complex.
The initial outlay required to purchase a single-purpose payment terminal, combined with ongoing monthly maintenance fees, long-term agreements and complex pricing structures meant that traditionally, cost, too, was a major gating factor in keeping card acceptance out of reach for smaller merchants.
MPOS, on the other hand, is characterized by a quick enrollment process, extremely low costs of acquiring the hardware, and the use of an app and a small hardware add-on to enable payment card acceptance with a common smartphone or tablet.
To support various card modalities (magnetic stripe, contact chip, near field communication NFC/ contactless) these hardware add-ons take several forms, such as a dongle attached to an audio or docking port, a sleeve or cover, or a wireless card reader.
From a software perspective, MPOS leverages a mobile payment app running on the mobile device, which provides both the merchant and customer user interface, and the connection to back end payment functions.
Equally critical was the creation of a novel "payment facilitator" role layered between the merchant and the acquirer.
The payment facilitator owns the merchant relationship, fronts the payment acquiring services to its merchants and underwrites the risk for the merchants enrolled for its services.
This allows for a remarkably frictionless merchant enrollment process that transforms this once arduous, multi-week process to one of only a few minutes