Not too long ago, one of my colleagues here at Credit Cards Canada went to the store and tried to pay with his chip and PIN card. The whole point of the card is that you are supposed to insert your card into the reader. The technology is designed to provide for more secure debit card transactions. However, my colleague discovered that he had to swipe his card — the store didn’t have a point-of-sale terminal compatible with chip and PIN.
Rolling Out New Credit Card Payment Technology
One of the issues with new credit card payment technology is that early adopters may not even get to use the new technology. In the U.S., a few years ago some credit card issuers began providing credit cards RFID technology. Simply wave your debit or credit card near the terminal, and the radio waves would help you complete the transaction. However, not every store in the U.S. is equipped with card readers compatible with the RFID technology. As a result, many Americans simply swipe, rather than take advantage of the RFID technology.
And, of course, before all Canadian stores can adopt chip and PIN, and before RFID becomes really widespread in the U.S., we’ve already got even newer payment technology coming out with near field communication (NFC). This technology would allow for you to use your cell phone as a credit card. It is also supposed to be quite secure. But how long will it take for stores to adopt terminals that are compatible with NFC? While we get excited about the cool credit card technology that would allow this sort of payment convenience, its widespread reality isn’t exactly just around the corner.
You May Get a Digital Wallet, But Where Will You Use It?
The next big cool payment technology is the digital wallet. You are supposed to be able to use it cash free — and plastic free, too. When Visa releases its digital wallet technology in the fall of 2011, you are supposed to be able to store all of your credit and debit account information in one app. You can choose which to use, and then wave it in front of the terminal, since the digital wallet makes use of NFC technology.
Once again, though, you might run into the problem of no one accepting your digital wallet. How many stores are likely to have terminals that support NFC by the fall? Making those sorts of upgrades can be expensive and time-consuming, and, in the present economy, many businesses are willing to pay the cost of upgrading swipe terminals to something that is supposed to be more secure. Even in Canada, the requirement for businesses to implement chip and PIN technology — or be held accountable for fraudulent purchases — has seen a number of delays.
Even with the delays, though, technology marches forward. Eventually, old terminals will have to be replaced. It’s likely that in the next few years they’ll be replaced by more advance terminals that can keep up with the developments in credit card payment technology. Until then, though, your digital wallet probably won’t do you much good at the grocery store.