06 April 2020

Is Cash Still the King or Is It Contactless?

by Meriç Özgen

The global Coronavirus threat is causing behavioral changes in the payment environment. Both cardholders and merchants need to eliminate the need for physical contact in shops in order to mitigate the coronavirus epidemic. Cash is still the most effective payment method, but due to its effect on triggering the spread of the virus, it is being replaced by contactless payments. Contactless cards, the most traditional form of contactless payments, and POS terminals that accept these cards with NFC technology have increased the rate of contactless payment’s global spread.  An advanced version of this technology consists of different forms of payment technologies with which we can both pay and accept card payment with our mobile phones, thus physically eliminating cards and POS. Although these technologies are not widespread, they are used worldwide, and their spread is expected to accelerate due to the epidemic.

Raising contactless limits…

The most important factor in the spread of contactless technology is "contactless transaction limits", which vary according to countries and regions. Today, we can make easy and fast transactions for the amounts that remain below the contactless transaction limits for particular countries, without entering a PIN, by tapping the cards remotely. It is also possible to make contactless payments above these limits with PIN entry to the POS device. In order to encourage the use of contactless technology, the contactless transaction limit of 120TL was raised to 250TL in Turkey as of March 18, 2020.

Europe is doubling the limits…

In Europe, the situation is parallel to that of Turkey. With the outbreak, 29 countries across Europe have decided to increase their contactless transaction limits. In countries such as the UK, Ireland, Estonia and Poland, contactless limits have been increased indefinitely, while some European countries such as Netherlands and Greece have opted for a temporary raise. The increased rate is generally twice the current amount. Estonia, Greece, Germany, Latvia, Luxemburg, Malta & the Netherlands have increased the contactless transaction limit from 25 Euros to 50 Euros, while Portugal, Spain, and Cyprus have increased it from 20 Euros to 50 Euros. Britain has increased the limit from 30 GBP to 45 GBP. In parallel with this development, an increase in contactless transactions throughout Europe, which is 75% of total card payments, is expected.

Mobile Payments and Mobile Acceptance Spreading Rapidly…

This behavioral change in consumers will trigger the rapid spread of technologies that enable contactless payment acceptance on mobile devices. It seems that we are very near to shopping in a world where plastic cards and POS machines don't exist, where consumers pay through their mobile phones to member merchants’ mobile phones.

At PayCore, Turkey's leading Fintech company, we have succeeded in developing new technology which will expand the use of smartphones and tablets as POS terminals across the world. The solution implemented by PayCore, together with Fiserv, Samsung, and Visa, will enable merchants to accept payments, regardless of the amount, with their mobile devices without using any additional device. Thanks to the application, PIN entry through mobile devices can also be made securely for transactions over a certain amount.

PayCore got the final approval -first in the world- from Visa for secure EMV Chip & PIN entry to support transactions over a certain amount, as well as sub-limit transactions performed without a PIN with Soft POS technology. As the technology provider of this important project, we predict that thanks to this innovation in the field of card acceptance, Soft POS will be used not only for low-cost value payments but also for all PIN transactions requiring cardholder verification and that it will soon spread rapidly.





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