Introduction to contactless payment system

contactless payment

Introduction

The contactless payment system is one of the affordable solutions which are available globally in market. It has been seen that this is fast, convenient and secure way to pay for products having cost below £20. This mode of payment is now-a-days getting popular in supermarkets, buses, trains, cafes, parking machines and at many more places. Wireless devices like mechanical keys, identity cards, paper tickets and contactless smartcards have replaced the use of cash and are embedded with high security functionality. Contactless payment can be processed in two different forms, first is contactless enabled card and the other one is near field communication(NFC) through smart phones. Currently, contactless payment cards are very common as compared to NFC since its slightly newer concept and are not widely used.

The Article in Guardian says, by the next decade card payment can forbidden the cash payment  and by 2022 the value of cash may suffer a great decrease ( 21 billion to 14 billion) however, card transaction may rise tremendously i.e. from 10 billion to 17 billion which can result in rise of payment through mobile or card(eNext, 2008). However, according to Ramachandran, Nisha(2006) by using these plastic cards that contains a chip inside allow users to simply wave their key chain card or credit card in front of special reader without even signing a receipt. By 2006 more than 10 million cards were issued by American express, MasterCard and visa brands so as to use at 30,000 merchant locations. Oehlsen, N (2007) in his book says, more than 13 millions contactless payment cards are issued for London transport and 5.5 million people out of which uses the card every month to pay. Oyster is based on technology called as Mifare which are owned by NXP semiconductors situated in Netherlands. London transport have started using contactless payment system from December 2013 (Glickenstein, H., 2013, p.19). The Barclay was the first bank in United Kingdom to issue the contactless payment card in 2007 however, if the transaction cost are higher, than “onePulse” card can be used which are issued by Barclay. OnePulse card carries a contact EMV or chip and PIN which can be used for paying higher amounts.

Background- Technological overview:

The card that are issued from bank have information which are stored on magnetic chip or integrated on circuit chip. Information which is stored on chip are read by readers making contact with electrical connectors however, physical contact is required for magnetic stripes as it is swiped on the reading head.

 NFC:

Near Field communication(NFC) is a technology, these are short range, high frequency, low bandwidth and have wireless communication. In NFC the communication takes place between two NFC enabled devices. These take place at frequency of 13.56 MHz which was originally used for RFID i.e. Radio Frequency Identification . Since, NFC are short range hence, reception and transmission are restricted to very short range and uses passive tags.

As noted by Ok, Coskun, and Ozdenizci, (2011) NFC is responsible for securing and simplifying the interaction which takes place around us using automated ubiquitous. NFC requires interaction of technology likes wireless communications, mobile devices , mobile applications and smart card. NFC technology is designed using server side programming, web services and XML technologies. Gilge (2009) in his report indicates that NFC is an extension of ISO/IEC 14443 proximity card standard.
contactless payment concept

Components:

A NFC device consists of loop antenna that is designed to generate radio-wave field. Magnetic inductive coupling is used to communicate between two NFC enabled device.  These NFC enabled devices can either be active or passive . If the device have internal power supply, such as POS reader and mobile phone then, they are considered as active. However, if the device do not have internal power supply, such as Smart card, smart poster are considered as passive. So as to communicate one of the two devices must be active. (Gilge,2009)

Working:

Inductive coupling is the main principle behind the communication. Due to inductive coupling, passive device absorb the energy from active device. This leads to waking up of passive device resulting in modulation of device field, transferring of data. Sometimes, active device can act as passive device. As suggested by Gilge(2009) active devices can have 3 cases:

  • Reader : Mobile phone act as active device, and is used to communicate with passive device as smart poster.
  • Card emulation: Mobile phone can act as active device, and is used to communicate with passive device as Point of sale (POS) reader.
  • Peer 2 peer: In this both the devices are active, and one reads the other.

When the NFC technology is embedded in smartphones, it can help shopper to pay by phones. This was originally launched by Google in September 2011 in its new feature known as Google Wallet. This application is a payment app which was launched in partnership with Citi, MasterCard, First Data and Sprint for android users.  Paul Cwalina who is senior vice president at First Data, Atlanta says that merchant who uses contactless readers surely must have taken payment based on Google Wallet, and they might even are not aware of it. Customer’s card information is encrypted and then are delivered to the mobile chip using Google’s most trusted service i.e. First Data this was highlighted in a paper written by Garry(2012).

Evolution of NFC

The First generation of NFC started from Barcode- the earlier form of RFID, the second generation was RFID, followed by Magnetic card stripe- the earlier form of smart cards and smart card technology as third and forth generations respectively.

I. The Barcode technology as the earlier form of technology: The Barcode consists of the data which is visual representation of the object to which it is connected. The information in this case was transmitted to computer by scanning the bar code. Example, QR code

II. RFID technology: Radio wave are used to communicate by exchanging data between RFID reader and an RFID electronic label that is attached to an object. The main purpose of RFID technology is to identify and track. The most common applications of RFID are:

  1. Toll road
  2. public transport
  3. passport
  4. inventory control

III. Magnetic stripe Cards as an earlier form of smart cards : In this form of technology magnetic stripe cards acts as the  storage space where data is loaded in starting phase. Example: now a day magnetic stripes are very widely used on bank debit, credit cards, loyalty cards, airline tickets and boarding passes (Garry,2012).

IV. Smart cards as a technology: Smart cards are embedded with IC which are used for memory. It consists of a microcontroller which have facility of security and an equivalent intelligent device as stated by Garry(2012). Smart cards can be divided into three groups i.e. contact and contactless smart cards and hybrid models.

Current problem: NFC in currently used in implementing location based  games. To include more realism it resulted in making social interaction between players.  NFC can easily be used for direct interaction of users and telling the actual location of them.

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