Contactless payment: what can consumers expect from the future?

Contactless payment
What can consumers expect from the future?

Around a quarter of Germans pay without cash every day.

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The corona pandemic has given cashless payments a boost. A look into the future of cash.

Germany has traditionally been a country where cash has a high priority. While in countries like Sweden or France up to 80 percent of transactions are already cashless, in Germany it is only 23 percent. According to a survey by the digital association Bitkom, this represents a five percent increase compared to the previous year.

Bitkom boss calls for nationwide payment options

The corona pandemic has given a great boost to contactless or cashless payment: 85 percent of the population made cashless payments at least once at the beginning of the year – an increase of six percent. Bitkom Managing Director Dr. Bernhard Rohleder: “Contactless payment has become the absolute standard since the beginning of the corona pandemic – and it will remain so. It is convenient, fast and particularly secure with a smartwatch or smartphone thanks to biometric protective measures such as fingerprint scanners.”

Almost two thirds of those surveyed (60 percent) say that they don’t care if you don’t have a choice when paying. A majority of 57 percent of those surveyed are therefore in favor of making cashless payments mandatory. Bitkom boss Rohleder: “It is overdue that customers everywhere get real freedom of choice when paying. Digital and contactless payment should be accepted across the board as well as cash.”

Diverse technical possibilities – which standard prevails?

For many people today, cashless payment means using their EC card: hang up briefly, wait for the beep, done. The reader only asks for the PIN code for larger amounts. For several years now, instant transfers have also been possible on the Internet, and many customers order on Amazon or Lieferando in real time with services such as “Klarna”. In addition, there is the unexplained role of cryptocurrencies, which are still waiting for their breakthrough as a fully-fledged means of payment.

There are also obstacles with technology, patents and company interests to consider: The NFC chips (“Near Field Communication”) built into smartphones, smartwatches and tablets today work according to the bank card principle, i.e. keep your device close to a recipient and so pay. The problem: Manufacturers such as Apple currently only allow the use of their NFC chips if the payment process is processed via the in-house “Apple Pay” service.

Companies and politics are fighting for the framework

The EU Commission sees this as a breach of competition law and is trying to force Apple to open its NFC chip. According to the news agency “Reuters”, a heavy fine and the mandatory opening of the Apple interface could be imminent – however, an indictment will not be brought before 2022 at the earliest. In Germany, the outgoing government launched such a legislative initiative in 2019, but it never came to a conclusion. That is why even savings banks are now using “Apple Pay”, although they too initially appealed for the NFC chips to be opened.

Apart from technical issues, the topic remains politically explosive. The criticism of cash: The fact that it is possible to pay with large sums of cash in Germany is ideal for money laundering of all kinds. Until customers like Bitkom boss Rohleder can make cashless payments across the board and with the devices of their choice, it should so still take a while.

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