The History of Contactless Payments

Contactless payments refer to payments made using near-field communication (NFC) technology. This technology allows devices in close proximity to each other to easily communicate and share data. Contactless payments come in many forms, including contactless cards and digital wallets.

While contactless payment methods have evolved quickly, they haven’t been around for all that long. We dive into the history of contactless payments, what they look like now, and what they’ll look like in the future.

History of Contactless Payments

  • 1995: The Seoul Bus Transport Association launches the world’s first-ever contactless payment card for commuters, the UPass.
  • 2008: Visa, American Express, and MasterCard all start offering contactless credit cards.
  • 2011: Google WalletTM and Android PayTM are launched, allowing contactless payments via smartphones rather than cards.
  • 2014: Apple Inc. announces Apple Pay®.
  • 2015: The U.S. implements EMV®, prompting thousands of merchants to switch over to NFC-capable terminals that enable contactless payments.
  • 2015-2017: EMV® liability shift implemented - The liability for a data breach will fall on whichever entity in the payments chain did not implement EMV® technology.
  • 2019: In the United States, major credit unions like BECU (credit) and PenFed announce they will begin issuing contactless cards.
 

Contactless Payments in the Present

In 2020, the usage of contactless payments spiked as customers and businesses looked for ways to lessen handling cash and touching communal surfaces such as PIN pads. In the United States alone, overall usage of contactless payments rose 150% between March 2019 and June 2020.

Originally, contactless payment methods were used mainly for small purchases, and therefore banks placed limits on the dollar amount of transactions made with these methods. Because of the increased usage of contactless payments this year, many banks raised their contactless transaction limits.

In addition to contactless cards and mobile wallets, QR codes are seeing increased usage. Many restaurants are now printing QR codes onto a customer’s bill. The customer scans the QR code with their smartphone and inputs their payment details.

While the term “contactless payment” causes most people to picture payments made with smartphones, card-on-file payments and recurring payments can also be considered contactless. For card-on-file payments, a business stores a repeat customer’s payment information and applies future purchases to that payment method. Recurring payments occur when a business charges a customer’s stored payment method in intervals, such as once a month. This method is often used with subscription-based services, such as wine club memberships.

The Future of Contactless Payments

Contactless payments are likely to stick around. Card issuers have started to indicate that they will soon make more contactless cards available. Visa expects that by the end of 2020, there will be over 300 million contactless cards issued in the U.S.

In addition to increased usage of contactless cards, mobile wallets, and QR codes, we’ll likely also see additional contactless payment methods, such as payments made using biometric authentication such as iris scans or voice recognition.

We might also see further expansion of “scan-pay-go” functionality, which has already been implemented by some grocery stores in the United Kingdom. Using this system, all items for purchase are marked with a barcode or QR code. The customer scans the code with their smartphone to purchase it, allowing them to avoid checkout lines entirely.

To keep up with the latest on contactless payments and other payment methods, check out our other blogs about the latest payment news and trends.

 

EMV® is a registered trademark or trademark of EMVCo LLC in the United States and other countries. www.emvco.com.

Apple Pay® and Apple Watch® are trademarks of Apple, Inc. All trademarks contained herein are the sole and exclusive property of their respective owners.

Android PayTM and Google WalletTM are trademarks of Google, Inc.  All trademarks contained herein are the sole and exclusive property of their respective owners. Any such use of those marks without the express written permission of their owner is prohibited.

Ashley Jones

Marketing Content Coordinator

Ashley Jones is the Marketing Content Coordinator at Global Payments Integrated, where she is responsible for digital content strategy, development, and analysis. A communications and digital marketing professional, Ashley has experience in the areas of social media, digital content creation, event planning, broadcast journalism, and administration.

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Ashley Jones