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Flash-to-pay cards may become new norm for small transactions

2013 is set to usher in a mini-revolution in the manner in which consumers make minor point of sale payments. Contactless payment systems that allow payments to be made by merely flashing a credit or debit card or other device over a reader are likely to be operational in many Finnish retail outlets, possibly as early as this spring.

Ruokaostoksia kaupan kassalla.
Contactless payment may revolutionise the way small payments are made. Image: Yle

The new system uses radio-frequency identification (RFID) and an embedded chip and antenna in the customer’s card to make secure payments of 25 euros or under. The system is said to enable transactions to take almost half the time of conventional methods.

Large Finnish banks OP-Pohjola and Nordea already made contactless payment cards available to their customers last autumn. However, the reluctance of Finnish retailers to install the necessary point-of-sale technology has meant that customers have generally not been able to use the new system. Danske Bank does not yet offer the RFID cards, but plans to do so are in the pipeline.

Paula Näkki, head of the consumer cards unit at Nordea, says that the bank’s contactless payment feature will be automatically embedded in all new Visa debit cards.

“The ball is in the court of the retailers,” says Näkki. “At least the cards are now available to customers.”

Nordea predicts that the use of contactless payment at points of sale will gain in popularity this year, despite the fact that at present some stores have not yet acquired the required payment terminals. Many stores have in fact already acquired them, but the contactless reading feature has not yet been activated.

New system is gaining ground

Petri Carpén, business director at the credit company Nets Oy, formerly known as Luottokunta, believes that 2013 will be a breakthrough year for contactless payment.

However, he does point out that uptake of the new system requires action on the part of various parties, including card issuers and retailers. It is likely that trial periods will come first, leading to more widespread uptake once trust has been established through a reliable track record.

He believes that the flash-to-pay method will become increasingly popular, especially in commercial sectors in which fast turnaround is important and where the average purchase amount is relatively small.

According to Carpén, the system has slowly been gaining ground. He says it is likely to appear first in lunch restaurants, kiosks and grocery outlets.

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