Something that may kill NFC
Came across a series of articles and events that have convinced me that NFC based payments are a long way off. If I were the guy at Apple, Google, RIM etc., in charge of NFC I would be afraid… very afraid.
I was asked to look at authentication systems by a prospective consulting client. They wanted to know of their idea (which is very neat) could be used for authenticating online transactions (replacing the username/password authentication). I was able to give him good news, but not what he expected...
But my research did produce some very interesting tidbits.
Here’s what I found…
1. $4B in credit card transactions were declined in the EU because American tourists only had credit cards with mag stripes. That’s about $40M in profits for US banks.
2. With the exception of the US, North Korea, Mongolia, and parts of Africa, credit card issuers are moving to EMV (contact based) chip cards and PINs. They are not issuing the RFID cards that have been issued in the US. The EU has a 65% penetration of EMV chip cards.
3. No terminal manufacturer (that I could find) makes a merchant terminal that handles both contact and contactless cards. OOPS
4. I could only find one vendor that made a combined chip card (contact and contactless).
Credit card issuers won’t make a change to combat fraud, but they will make a change if card acceptance becomes and issue. And, since both Canada and Mexico are in the process of converting to chip and PIN, I think were going to see some changes soon.
What does this mean for NFC? NFC is basically an upgrade to the PayPass and similar RFID card systems. If Visa/Mastercard/AMEX/Discover go to contact based cards (like the rest of the world seems to be doing), NFC terminals will disappear. No terminals, no NFC transactions.
I was asked to look at authentication systems by a prospective consulting client. They wanted to know of their idea (which is very neat) could be used for authenticating online transactions (replacing the username/password authentication). I was able to give him good news, but not what he expected...
But my research did produce some very interesting tidbits.
Here’s what I found…
1. $4B in credit card transactions were declined in the EU because American tourists only had credit cards with mag stripes. That’s about $40M in profits for US banks.
2. With the exception of the US, North Korea, Mongolia, and parts of Africa, credit card issuers are moving to EMV (contact based) chip cards and PINs. They are not issuing the RFID cards that have been issued in the US. The EU has a 65% penetration of EMV chip cards.
3. No terminal manufacturer (that I could find) makes a merchant terminal that handles both contact and contactless cards. OOPS
4. I could only find one vendor that made a combined chip card (contact and contactless).
Credit card issuers won’t make a change to combat fraud, but they will make a change if card acceptance becomes and issue. And, since both Canada and Mexico are in the process of converting to chip and PIN, I think were going to see some changes soon.
What does this mean for NFC? NFC is basically an upgrade to the PayPass and similar RFID card systems. If Visa/Mastercard/AMEX/Discover go to contact based cards (like the rest of the world seems to be doing), NFC terminals will disappear. No terminals, no NFC transactions.
posted by Michael Scharf at
10:21 AM
1 Comments:
The Verifone 850 terminal supports EMV/mag/contactless at once. Both NXP and Infineon manufactures dual interface cards - with contactless and chip interface. Chip and PIN is a risk management solution, addressing the rampant offline authentication in Europe. I hope it helps.
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