Ready or Not, Contactless Payment is Coming to a Business Like Yours

We’ve all heard about it years ago – walking up to a vending machine, waving a card or smartphone over a sensor, and buying your ice cold soft drink without needing cash or swiping your credit card. What happened to that? If you’re from Australia or New Zealand, then this is nothing new, and throughout the U.K., Europe, and Canada, such technology is widely used by consumers for all sorts of transactions. In fact, 20% of Canadian MasterCard purchases are contactless payments. Get ready, though, because by October 2015, all U.S. debit and CC’s are required to have embedded microchips to process transactions without swiping a card.



Contactless payment devices combine radio frequency (RF) technology with layers of security precautions to make them safer than swiping a CC. Current CC technology uses radio frequency identification (RFID) and magnetic strips which is a read-only process with minimal memory and security and transferrable over greater distances. This leaves CC’s more vulnerable to theft.


Contactless payment devices contain a secure microchip to store card information safely and to perform layers of cryptographic processes. RF (or near-field) technology requires the microchip to be in close proximity (or near the field, approximately 2-4 inches) to initiate a transaction. Each chip contains a unique secret key that uses industry standard encryption to generate the CVV, cryptogram, or authentication code. That unique key is never repeated or transmitted. The cardholder has complete confidentiality and control over the transaction, since he/she does not relinquish control over the device and his/her name, card number, and code are not transmitted to the POS system of the business.


Who’s Using This Tech in the U.S.?

Near-field communication technology has been around for over a decade. Many government organizations have already entrusted secure information to contactless smart card technology, including ID cards for all Federal employees, credentials for the Transportation Security Administration, and new ePassorts issued by the Department of State. Transit systems in many major U.S. cities have adopted the technology for quick and easy fare payment.


You may have noticed already that chains like Macdonald’s, Starbucks, Subway, Whole Foods, Walgreen’s, and Macy’s offer some form of contactless payment. PayPal and Google Wallet already have people thinking about alternative ways to make purchases, and now that Apple has entered the contactless payment market with Apple Pay, this form of payment may grow rapidly in popularity. Known for its security, Apple is utilizing fingerprint ID technology, a secure microchip, and a one-time use security code to make Apple Pay very secure for the consumer. Similar to the European chip-and-pin card system, Apple’s technology could prevent the type of security breaches that struck Home Depot and Target.


Ready or Not

Near-field communication technology will require small businesses to purchase or update equipment and POS systems, but luckily, combination systems that process both types of CC’s are already available. Prepare yourself for the contactless future. Find out more about smart card technology and security at




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