The introduction of cards for payments
The first debit card was launched in the UK in 1987. Now with 176 million payment cards in the UK alone, no one expected these small pieces of plastic to completely change how payments were made forever.
However, when initially established these cards were vulnerable to fraud with the only method of security being a signature required after the card was swiped to verify the payment. A fraudster could easily steal another’s card and fake a signature meaning billions of pounds could be spent in fraudulent purchases.
Chip and PIN cards
Seeing this rising issue banks introduced Chip and PIN cards, the debit and credit cards included a microchip which stored data on the card. This system aimed to reduce fraud by integrating two-factor authentication into payments requiring the customer to have something they owned (their card) and something they knew (their PIN) to make a purchase.
Although strongly established in the UK and many other countries across the globe, Chip and PIN failed to take off in the US with Americans still favouring the old swipe and sign process for payments.
10 years of contactless payments
In 2007 Barclaycard introduced the first ‘wave-and-pay’ credit card for purchases under £10 slowly moving up to a spending limit of £30 in 2015. Ten years from its initial launch, contactless payments are soaring in the UK. With more than 50% of all purchases made in the UK with cards, contactless has made the process seamless, simple and fast – all the things consumers want.
The British public were initially slow to embrace the technology with this payment process residing in coffee chains and sandwich shops to begin with, but recently the number of contactless payment devices has exploded across major retailers.
But what about SMEs?
Although a thriving industry in the UK with over five million SMEs, and the ever-growing adoption of card payments for purchases from consumers, only 50% of SMEs are able to accept card payments.
Reasons for this are the extortionate fees surrounding EMV compliant devices, resources and technologies associated with these mPOS terminals.
It has been predicted that cash usage will be eclipsed by debit cards and contactless payments by 2021, 78% of all UK retail spending is already done via a card. As a result, it is becoming clear SME retailers must be able to accept card payments if they are to meet customers’ demands for a cash-free shopping experience.
So, how will SMEs meet these demands? One of our clients, MYPINPAD, has developed a PIN on Mobile solution which creates a trusted and hardened environment that protects the consumer, building upon their established trust of PIN, enabling strong multi-factor authentication with security and simplicity at its core.
The customer’s card PIN number is entered directly and securely into a mobile device to authenticate the transaction. This radically challenges the traditional POS terminal market and represents a major move to increase card payment acceptance, whilst reducing hardware costs and operational complexity. It also addresses customers’ growing appetite for convenient cash-free payments.
With card payments dominating the landscape and the inevitable move towards a cashless society in the UK, entering a PIN into a mobile device will soon become a routine way to enable authentication of payment transactions.