Tap and Go: The Future of Payments

By –Atul Singh, Regional Director – India Subcontinent – Banking and Transport Solutions, Gemalto

Precipitated by the rapid uptake of contactless cards for payments and then to payments via smartphone wallets, the payments industry in itself is witnessing yet another defining transition with the availability of payment options via wearables - the hottest new trend and category in consumer technology.

Paying your shopping and restaurant bills with a smart watch or buying a bus ticket using an embedded chip in your fitness band or who knows in the future, using the ring on your finger to get access to an event, can be a reality soon in India.With the aim to make everyday life easier, contactless technology is transforming the way we make payments - for travel, entertainment, food and a lot of other things. The likes of smartwatches and fitness trackers are the most frequently seen wearable payment devices. These latest used case examples demonstrate how easily new technologies can turn into devices for making our day to day lives much easier and faster.

But what is this technology and how is it enabling the transition?

Payment wearables can be defined as any item that is wearable electronic device and is installed with a payment chip/Near Field Communication (NFC) antenna to support any of your payment (transactions) requirements while offering all functionalities of an EMV contactless card. Easy to use and bedecked as a smartwatch or a smart band, contactless payment via wearables is witnessing massive uptake around the world. This technology platform ensures swiftness, convenience, and flexibility of use for every day and often lower-value payments. Restaurants, movie theaters, vending machines, stadiums or festival areas are just some areas where contactless payments are mushrooming. In fact, a recent Gartner study highlighted that half of the consumers in developed economies are expected to be using smartphones or wearables for mobile payments by 2018.

Atul Singh, Regional Director – India Subcontinent – Banking and Transport Solutions, Gemalto

Where did it all begin?

The revolution in the payments sector started with a need to move away from the fear of losing cash and to make payments for goods and services at retail outlets simpler. The transition began when paper money was replaced by cards with a magnetic strip. A buyer could easily swipe these cards at a point-of-sale (POS) terminal which allowed easy passage of buyer information to the seller in digitized format. The technology evolved from signature authentication to digital PIN, which is now witnessing another redefining transition with emerging NFC technology.

Where are we now?

The installation of contactless readers for widespread NFC enablement continues to accelerate in areas such as fast-food and beverage chains, retail stores and entertainment venues. Public transportation departments around the world are installing contactless readers in collaboration with EMV standardized institutions to enable the ease of use and payment for daily commuters. According to a recent report, the global POS terminal market is likely to reach $73.12 billion by 2020, indicating an overall steady adoption while ensuring hassle free and better user experience. The communication between the contactless payment wearable/card and the POS is made secure with encryption, which means these transactions are completely secure with minimal or no chance of fraud. This security assurance is further boosting the adoption of contactless payment systems worldwide.

The contactless payment technology, also known as ‘wave and pay’ or ‘tap and go’ is starting to show demonstrable traction in India as well. With the introduction of contactless cards and token, Delhi Metro Rail Corporation (DMRC) has taken some early steps to pave the way for a convenient way to travel. Additionally, banks including the likes of ICICI have joined hands with various public transport units and MasterCard to support this functionality. Riders in India’s metro cities can now simply swipe their contactless card at the station, skipping the queues to purchase tokens or recharge their smart card balance.

What all services do contactless wearables support?

• Access and payment –Easing the process of checking tickets and access, contactless wearables make it easy for the large scale event organizers to manage crowds, long queues and related facilities at event venues. For example, supporters of the Saracens rugby union club can now use prepaid contactless wristbands to pay for food and drinks at its Allianz Park stadium in north London, UK. Similarly, the 145^th Open Championship at the Royal Troon golf course was enabled for contactless payments, making it easier for spectators to spend more time watching the game rather than spending the time standing in queues.
• Public Transportticketing–Whenever passengers use public transport, a convenient and smooth journey is paramount. Contactless ticketing technology has enabled, for example, Singapore to allow ticketing via contactless cards on buses, tubes, and trains.In London, travelers use Apple Pay on their Apple watches to access the tube, as well as Barclaycard’s payment wristbands. In India also, metro rail corporations in Delhi, Mumbai, Mysore and Bengaluru are in conversations with various banks to enable contactless ticketing technology.
• Mega events management–The contactless wearable technology is a big relief for crowd management in terms of quick access/ exit and managing queues. The enablement of stadium access and merchandise payments via wristbands helps you avoid fumbling your wallets for paper tickets or being bothered by family members for cash to buy food and merchandise. With this easy and fun process, you can just add credit to the wristbands in action and be safe as you need to carry very less or no cash to such gala events. Disney recently launched MagicBands, a type of wristband to facilitate payments and allow visitors to access their hotel rooms easily and skip longer lines while visiting Walt Disney World Resorts. The global payments technology company, Visa equipped its team members with NFC-enabled rings to make purchases around the city with a tap of the finger during Rio Olympics. Additionally, theRio government recently implemented the contactless transport ticket wristband solution for daily commuters and visitors, ensuring smoother and convenient travel experience.

Future for contactless technology in India

With the increasing number of contactless projects being rolled out by banks and other stakeholders in India, the use of smart wearables for payments is set to gain momentum. This will also get a push from the developing payments ecosystem and the rapid increase in the number of POS/ mobile POS terminals due to increasing small and medium sized businesses.While more device makers like FitBitmoving towards wearables as the next mode of payment, we can certainly expect to see additional products being launched in this industry. And not just by tech companies!  Credit card issuers are also working with institutions worldwide to provide contactless offerings. In India as well, along with adoption of contactless technology for public transport ticketing, festivals like Sunburn in Goa with footfalls from at least 50 countries every year will go cashless in 2016 to ensure a hassle-free and interactive experience for the music fanatics. With a basic drive to enhance the user experience, the contactless technology, whether applied through wearables or smart devices, is set to grow.