We Germans are still a bit old-fashioned compared to the rest of Europe: we still prefer to pay in cash. Compared to the French, for example, we even use our EC or Visa cards less often. But now cards are also facing competition: the trend is towards contactless payment by cell phone. In the USA, 12.7% of smartphone owners already used this technology in 2016, and in Denmark one in three people already do so. Soon, we too will be reaching for our cell phones more and more often to replace our wallets.
How does this work?
Most frequently via Near Field Communication (NFC). This technology was invented specifically for payment purposes and is characterized by the fact that it only has a range of a few centimetres and can only transport small amounts of data. The customer must first install an app. For amounts up to around 25 euros, the smartphone only needs to be held briefly against the checkout terminal. If more money is involved, customers have to enter a numerical code or identify themselves with a fingerprint (Touch ID).
What are the benefits?
For us customers, the advantages are obvious: the cell phone is ready faster than cards from a wallet, the whole process avoids long waiting times and is absolutely uncomplicated. Merchants save the fees charged by EC and credit card institutions and they can set up special bonus or discount programs to retain customers.
Where does this already work?
More than 80,000 checkout terminals at drugstores, petrol stations, discounters, supermarkets and department stores already offer this service.
What is still lacking?
Every retailer is still cooking their own soup, so to speak, and there is a lack of comprehensive solutions that work for both iOS and Android devices. Many chains offer their own mobile payment systems and have them implemented by third-party providers, each of which requires its own app, such as Payback Pay or DB Mobile. And is that even secure? Clearly, this is where Germans' biggest concerns lie. Can't an unauthorized person gain access to the account? The promise of security is that reading only works at very close range. However, anonymous payment is no longer possible; every buyer leaves a data trail. It's the same with online shopping. Important: Always check your bank statements.