Mobile telephone vs banking card or who will win in Russia?
Either mobile telephone or banking card will win in contactless payments? Cellular operators had offered micropayments comparatively not long ago, but the number of users, who at least once used this service is already calculated by millions. Mass implementation of contactless payment chips into mobile telephones is expected in the foreseeable future. This should make mobile payments fast, convenient and accessible.
Will banks and international payment systems VISA and MasterCard apathetically look at loosing their positions on the market of mass payments?
At the top of crisis in 2008 Russian «daughter» of Barclays Bank announced about common with international card payment system MasterCard project on the base of PayPass technology. However, due to crisis the project was postponed for 2 years.
In the fall of 2010 Moscow Industrial Bank announced about a pilot project envisaging issue of 15 000 banking cards to the students of Financial University attached to the Government of Russian Federation. Cards will serve not only as a purse when paying at a students’ canteen, but also as students’ ID and record-books.
In March 2011 Raiffeisen Bank announced about the issue of the World MasterCard Black Edition card. These cards support settlements through PayPass system and have both an ordinary magnetic stripe and microchip. The Bank has already announced about its plans concerning issuing credit cards with similar technology.
In the press information has recently appeared that PetroCommerce Bank is preparing for introduction of a contactless cards project.
How are new banking cards arranged? An ordinary bank magnetic stripe card is additionally equipped with the special chip and built-in aerial. To pay for goods and/or services one needs to bring his card closer to the special terminal, check the amount of transaction and wait for a beep, after which the needed amount will be debited from the cardholder’s card account. It is not required to enter any codes manually and card authorization is not executed. Due to this the payment process lasts some seconds only. It is very convenient when paying for transport services, fuel as well as for small purchases in shops and café bills.
The maximum amount of contactless payment abroad is limited for $25-50, and in Russia - one thousand roubles. In case of large amounts it is required to enter one’s PIN.
Such method of payment prevents cards from deterioration and allows them to serve longer. You do not pass your card for authorization in the hands of serving personnel, that reduces the risk of fraud. You can make purchases for large amounts, withdraw cash at any ATM as well as make payments at about 30 million points of reception of payments all over the world. Such universality can’t be offered yet by payments from mobile telephone’s account.
Similar technology has as well another international payment system – VISA (it is named payWave), but there is no any information concerning projects of its introduction in Russia.
Readers may object - what about contactless payment cards for payments in Subway, which are used by millions of Muscovites? What a pity, but such cards are incompatible with international payment systems and despite of their convenience could be considered only as an intermediate project.
So, what contactless payments will win in the result - from mobile telephone’s account or with the use of banking cards?
On the side of banking cards is universality, and in favor of mobile telephones can play that circumstance, that they already lie in a pocket of everybody.
In spite of presence of compromise solutions (for example, VISA PayWave MicroSD cards, which are inserted into smartphones), banking cards are lagging behind yet - both according to temp of introduction and its driving force. In fact, many even large private banks announced not once, that the market of micropayments is not interested for them. However, pressure from the side of state banks on the markets of ordinary services can force them to change the opinion.
So far, infrastructure of contactless settlements outside the Moscow Subway is practically absent.