The Rise of Contactless Credit Cards in Canada
Max Shak • June 24, 2016
In recent years, the Canadian consumer population has witnessed a rapid rise of contactless credit cards in the payment industry. This trend is a logical one as the world is constantly moving faster and consumers are seeking the latest high-tech convenient options that will assist them in making their lives easier and hassle-free. Consumers now utilize contactless credit cards routinely for their purchases on a daily basis. As a matter of fact, as of 2014 more than 70% of credit cards and 40% of debit cards in Canada supported contactless payments (Credit Cards Statistics).
The Evolution of Contactless Credit Cards and Contactless Debit Cards
Contactless credit cards actually originated with contactless smart cards that were first introduced for the purpose of electronic transport ticketing in Finland. Since then, smart cards with contactless technology have been widely accepted as a popular payment method especially with mass transit.
In terms of consumer retail application, Mobil was one of the first known companies to adopt the contactless technology. They offered a “Speedpass” contactless card at participating gas stations in 1997, where customers are able to pay with their card by tapping instead of entering their PIN.
McDonald’s, KFC, Burger King, and Subway are among other retailers that jumped on the bandwagon offering contactless payments to their customers in the UK. Major financial institutions such as MasterCard, Visa, JPMorgan Chase, Citibank, and others embraced the contactless innovation as well and launched contactless credit cards that supported this efficient and user-friendly technology.
In October 2011, the first mobile phones with MasterCard PayPass and Visa payWave certification appeared. A PayPass and payWave account could be assigned to the embedded secure element and SIM card within the phones. Android Pay is an application for devices running on Google’s Android OS system, which allows users to make purchases using NFC technology. Similarly, Apple Pay is embedded in a customer’s phone whereby as soon as the customer pulls up the app, and waves the app at a terminal that accepts Apple Pay, a transaction is processed (Contactless Payments).
Technology behind Contactless Credit Cards and Contactless Debit Cards
Contactless smart card readers enable contactless credit cards to utilize radio waves to communicate with, and both read and write data on a smart card. When contactless credit cards are used for electronic payment, they are commonly located near PIN pads, cash registers and other places. Contactless debit cards work the similar to contactless credit cards where a customer just has to Tap his or her card against the POS terminals and voila!, their transaction is complete (Contactless Payments).
How Contactless Credit Cards Work with MasterCard’s Tap & Go
Contactless credit cards work with a tiny microchip and radio antenna that are embedded in customers’ MasterCard cards, key fobs, or mobile phones. Customers’ payment details are wirelessly transmitted to a high-speed contactless reader, which then uses the MasterCard network to verify the transaction with the customer’s institution (MasterCard’s Contactless Credit Cards).
MasterCard’s Contactless Credit Cards Security
The combination of encryption technology and MasterCard’s Zero Liability protection program make using MasterCard’s contactless credit cards very safe at checkout. MasterCard contactless technology has built-in precautions that help to prevent unwanted purchases:
- It never leaves your hands at checkout
- It must be extremely close to the reader to work
- It only bills you once — even if you tap twice by mistake
How Visa payWave Contactless Credit Cards Work
Similar to MasterCard, Visa payWave contactless credit cards have an embedded antenna and microchip, enabling “contactless” communication with a reader at checkout. No swiping, no inserting, no signing or PIN required as long as the purchase is under the set limit requested by the customer. If the purchase is over the limit, the customer may be asked to sign, swipe or insert their cards (Visa payWave Contactless Credit Cards).
Visa payWave Security
Visa payWave uses EMV chip technology that guards against frauds and enhances security. Visa payWave transactions are processed through the same secure and reliable network used for all Visa transactions, and all Visa cards carry the Visa Zero Liability policy which offers customers protection from fraudulent transactions. Since customers will have their card in their hands when paying, the chances of frauds will be significantly reduced.
Credit Cards and Debit Cards Fun Facts
According to CreditCards.com , the following are some interesting facts pertaining to credit and debit card usage in Canada:
- 23% of Millennials in North America make a mobile payment at least on a weekly basis, compared to the overall average of 18%.
- In the fourth quarter of 2015, use of credit cards was increased by 7.16%, and spending on debit cards by 2.7%
- Contactless payments accounted for 5.8% of all transactions in the fourth quarter of 2015, which doubles the share from the same period in 2014
- The average number of credit cards per Canadian adult was 2.2 in 2015 which includes Visa, MasterCard and American Express
MONEXgroup and Contactless Credit Cards
Since the recent arrival of Contactless Credit Cards technology and widespread adoption in the Canadian market, MONEXgroup has been at the forefront of this trend and we have been consistently upgrading our POS terminals in order to remain industry leader. Therefore, all of our in-store, the Clover Mini, and wireless POS terminals, the Clover Flex, include embedded Contactless readers which support NFC contactless payments.
Our fast, reliable and flexible Contactless POS terminals function ideally both in-store and On-the-Go with the “Tap & Go” feature. Gone are the days of carrying and using cash! Being Canada’s leading independent payment processing provider, MONEXgroup’s mission is to provide innovative, cost-effective and stress-free merchant service solutions that include fully-integrated point-of-sale terminals, wireless and e-commerce payment solutions and technologically advanced Mobile Checkout to our merchants nationwide. We deliver our merchants top-of-the line technology and customer service, as our vision is to be the leading customer-focused payment provider by forging long-term relationships and offering innovative payment solutions throughout Canada.
When partnering with the number one payment processor in Canada; MONEXgroup will increase your efficiency and quality of service and lower the related costs. Request a Cost Comparison Analysis today.
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