Chips With Everything - Difference between Contactless Cards and Smartphone Payments

15 Jul 2019

Chips With Everything - Difference between Contactless Cards and Smartphone Payments
Chips With Everything - Difference between Contactless Cards and Smartphone Payments
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Changing how we pay is now “always on the cards”. It was only in January 2008, that Chip and Pin technology was launched in Cyprus. Up until that point, a signature was still required on a credit or debit card slip. A little over ten years later and the world of merchant payment services and credit card gateway services on the island is transformed by the increasing shift to the use of contactless cards.

By 2013, contactless technology had reached around 1,460 businesses across Cyprus, which included global chains, Costa Coffee and Starbucks, but also local outlets, such as pharmacies, bakeries, supermarkets, petrol stations and units in retail malls. In 2017, Cyprus accounted for 39.3 million cashless transactions to the value of 0.3 trillion euros, according to the Merchant Machine, November 2018.

Confusion and misunderstanding still exists

Then in June 2019 came the news heralding the end of chip and pin as fingerprint-activated ‘biometric’ bank cards became available in Cyprus. Merchants will be relieved to learn that a biometric card works with current standards, so there would be no need to change existing infrastructure. Businesses can often risk losing valuable new - and even regular customers - when they simply continue with their pre-existing but outdated technology systems.
Even as we move into the next generation of payment technology, it is perfectly understandable that confusion and misunderstanding still exists over how contactless works, especially if a smartphone is involved. And there is the lingering suspicion and doubt over security, and the risk of card hacking or theft.
It’s important to understand the key difference between a payment made by contactless card and a payment made by a smartphone.

Serve customers much quicker

All contactless debit / credit card cards possess a small internal microchip and antenna, which emits radio waves, known as radio frequency identification or RFID, which is commonly used in security tags, security fobs, and smartwatches. However, smartphone payments use near-field communication, known as NFC, which is based on RFID technology but works in a slightly different way.
Payment by contactless payment card requires the customer to place their card on or close to the card reader to activate communication between the reader and the card’s microchip. Smartphone payments, such as Apple Pay and Google/Android Pay requires the phone to also be placed close to the card reader to exchange data. However, both devices must be equipped with an NFC chip, using “one-way” communication in which the phone, credit card reader, or commuter card terminal reads and writes to an NFC chip.
Contactless payments are completed much faster than Chip and Pin payments, which enables merchants to serve customers much quicker too. Contactless payments are especially effective for retail / high street outlets selling low transaction goods at high volume, and is increasingly the difference between a customer walking away (who doesn’t carry cash) or completing a transaction.
Cashless customers can lose you sales!
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