New Mandates Driving Tap‐and‐Pay Uptake
Mastercard and Visa both now require that newly issued payment cards be dual interface, which adds further force to the changes sweeping through the world of payments. Mikko Kähkönen, Head of Product Management Payment at G+D Mobile Security, discusses the latest developments behind the uptake of Dual Interface Chip Cards.
Q. Mikko, important announcements have been made recently about DI (dual interface) cards. What do they signify?
A: An acknowledgement of reality. Contactless payments have been growing dramatically in recent years. As examples, in China, 90% of all issued cards are now contactless, while more than 70% of point‐of‐sales terminals in Poland and Spain are contactless enabled. In places like Australia, Canada, and Singapore, 50% or more of consumers used contactless payments in 2016.
The announcements by Mastercard and Visa acknowledge this and are the next logical step. As of April 2019, Mastercard requires all new cards to be dual interface for much of the world. The Visa timetable is even tighter with a date set for October 2018 for all new cards in Asia‐Pacific and Latin America.
From October 2018, all newly deployed terminals in much of the world must support contactless and NFC‐enabled mobile payments for MasterCard and Maestro with a final date set for April 2023 for all terminals. So, this will be transformative in terms of the continued growth of contactless payments.
Q. As an expert in this area, so can you tell me what is behind these decisions?
A: In short, convenience and security. The checkout process is much quicker and easier when just tapping your card, allowing for a better customer experience. Simultaneously, cards are equipped with state‐of‐the‐art security features, issuers can control the spend between transactions and require e.g. a PIN to be entered when certain conditions apply. Security can also be enhanced with even biometric cardholder verification, making life even harder for fraudsters.
Q. Mikko, what makes DI chip cards special?
A. The cards are equipped with an antenna, so in addition to using the contact chip when dipping the card, it can also be waved at the terminal to complete a purchase – hence dual interface.
When you pay with an DI card, the microprocessor chip creates a unique transaction code that cannot be reused, and can only be verified by the card issuer. Additional security comes from the card authenticating itself to the terminal based on public key infrastructure. This makes counterfeiting so much harder and the challenge to fraudsters difficult to the point of being impossible.
Q. So, how should banks react to the changes required by the payment schemes?
A. These are mandatory requirements, so banks must react, but most have been moving in this direction as DI chip cards are already well on their way to become the standard in various parts of the world.
I mean the ease‐of‐use is exceptional. You hold the cards one‐to‐four centimetres away from the terminal and it can capture the transmitted data quickly and securely. The cards are compact, highly secure, and save time. The transaction duration with DI cards is currently close to 200 milliseconds, which is also why merchants love them as they help keep queues to a minimum.
The checkout process is much quicker and easier when just tapping your card.
– Mikko Kähkönen, Head of Product Management Payment at G+D Mobile Security
Q. And you can expect greater uptick in the use with contactless cards becoming almost universal.
A. Absolutely. For issuers, the business case is about the ROI of converting cash to‐card‐based transactions. In Europe in 2014 to 2015, for example, transactions made using Visa per month rose by 18% after the introduction of Visa Contactless.
With DI cards mandatory, we will find more consumers take up of contactless payment even for small purchases, such as for transit tickets. In the US, where there is increasing interest in contactless payments, several mass transit systems – Chicago Transit Authority, Utah Transit Authority and bus systems in New York, Philadelphia, and Boston – are converting their closed‐loop systems to open loop that facilitates contactless payments via cards like Mastercard or Visa.
Such developments will not only further displace cash but stimulate further transactions. Banks need to be sure they are getting the right cards in the end customers hand at the right time and G+D has a strong record of helping issuers achieve this.
Q. What innovations does G+D offer? What makes your cards special?
A. Apart from the exceptional levels of reliability of our cards, G+D is also a leading expert in security, so our solutions always feature the latest measures, plus we offer further innovations such as cards supporting biometrics or dynamic CVC. We support all global payment brands, as well as local debit cards with a wide portfolio of contactless cards that can be used for identification, authentication, and data storage. Our 2018 product generation offers all this and more.
Q. Such as?
A. A wide and attractive portfolio of different card bodies allows the issuer to stand out from the crowd by enhancing and differentiating their cards to build trust and loyalty and add brand engagement. These can be highly personalized, such as in the form of metal cards, 3D printed cards, cards with metal effect or environmental non‐plastic cards. G+D also offers a lot of add‐ons available in many different form factors, such as stickers and wearable LED cards. This can help push banks even more to the centre of the customer experience enabling them to serve, nurture, and manage their customers in a secure way.
Q. Mikko, what does G+D offer banks that distinguishes you?
A. Anyone who pays by cash, card or smartphone anywhere around the world is likely to be using technologies from us. So, while we are a proudly German company and believe the national traits of precision and quality engineering are reflected in our products, we are a global company highly aware of the developments taking place internationally and able to provide solutions to meet those challenges.
This is part of the reasons why many issuers consider G+D to be the partner of choice in the payment ecosystem and we are definitely number one when it comes to Dual Interface Chip Cards. We have a well‐established reputation for excellence in our products. Plus, we provide extremely fast go‐to‐market, regional specific solutions based on our years of experience. By partnering with G+D, banks have an efficient, faster project rollout, which means faster card activation and this in turns means a faster return on investment.
More information on dual interface you find here.