Digital Transactions Authoritative, insightful and timely information for payments professionals
And you thought contactless technology was just for payments. Turns out, while it’s enabling more and more payments at the point of sale, the technology is offering even greater potential.
Contactless transactions were supercharged by the pandemic, and now slightly more than half of U.S. cardholders are using the technology when they pay with either cards or wallets, according to Mastercard Inc. research. So researchers are looking at ways to expand near-field communication technology, enabling a tap or wave of a card to trigger a range of functions beyond payment.
Such an expansion may include receipts, loyalty points, and personal identification, according to the NFC Forum, a payments trade group that performs research on tap-and-pay technology to set up specifications and enable interoperability. The Wakefield, Mass.-based group last month released its first paper on what it calls “multi-purpose tap.”
The forum expects multi-purpose tap to “revolutionize the contactless user experience,” it says in its announcement, by including a range of purposes beyond payment. These could include, for example, allowing cardhlolders to pay with one tap for multiple legs of a mass-transit ride.
“Multi-purpose tap will bring even more convenience to contactless user experiences by making it possible for multiple transactions to be seamlessly conducted over the course of one single tap,” said Mike McCamon, the forum’s executive director, in a statement. His group so far has been working on feasibility studies and honing use cases for the technology, according to the forum.
Outside experts are encouraged by all this but caution there are practical hurdles the effort will have to overcome. “There is some demand for it. It is feasible,” notes Cliff Gray, principal at Gray Consulting Ventures LLC. “The trick is I have to go on my phone and select which alternative payment I want to effect when I tap. NFC doesn’t know.”
Worldwide, tap-and-pay transactions (in many cases, it’s actually “wave-and-pay”) are expected to total $7.4 trillion in volume this year, according to Juniper Research. That number will more than double, to $15.7 trillion, by 2029, the firm forecasts, adding that the growth will likely be led by ticketing and so-called softPOS, or transactions carried out with an ordinary smart phone acting as the merchant’s payment terminal. The device can interact with either a contactless card or another phone.
Mass transit presents a particularly ripe opportunity. Several train lines have already adopted the technology or are preparing to. In one of the latest developments, the Southeastern Pennsylvania Transportation Authority, based in Philadelphia, early last month harnessed contactless fare-payment technology from Elavon Inc. What’s notable is the line is the seventh-largest U.S. transit system, with 45.6 million riders yearly.
— John Stewart, Editor john@digitaltransactions.net
