Who could’ve thought, a decade ago, that we could use our smartphone to make payments at grocery stores? Forget that, go back few decades back and smartphone or mobile as we call it (mobile means able to move freely, moving) wasn’t a reality. We’ve really made some great achievements over last few decades. The rise of smartphones and Internet in early 2000s along with machine to machine communication, which has been around since 70s, and then Internet of Things (IoT), technology and innovation have contributed significantly in globalization and growing economies.
Use of debit cards and internet banking and mobile banking seems archaic when you can just tap your smartcard, NFC based debit card, or even your mobile phone at POS to make payments. QR code-based UPI payments is another achievement made possible with smartphones and internet and India is a towering example of digital payments made available to everyone with UPI payment transactions over 74.05 billion in volume and 126 trillion INR in value, in the year 2022.
RFID mobile payments is also gaining traction and the simple reason being ease of transaction and security. It allows consumers to pay for goods and services by tapping their mobile phone on an RFID reader. This technology is gaining widespread acceptance among businesses, merchants, and consumers worldwide and the economic impact of contactless payments driven by NFC and RFID is profound.
Let’s explore what RFID-based mobile payments are, their benefits, and their future potential.
What is RFID-based mobile payment?
RFID is short for Radio Frequency Identification, a technology that relies on wireless communication to transmit data via radio waves. For example, take a debit/credit card with NFC (Near Field Communication) that you tap on a reader at POS and the amount is deducted from your bank account instantly. Now imagine doing that with your smartphone and not a debit or credit card!
How RFID Mobile Payment Works?
Since RFID is a short range wireless communication standard and it utilizes an RFID tag (which has a microchip), an RFID reader and a software based interface to get the job done; you have to transcend this idea for mobile payments to understand how this works.
RFID mobile payments work by integrating an RFID chip inside the mobile device, which is then linked to an application or wallet on the phone. This application then stores and manages the user's payment information, which is transmitted to the merchant's payment terminal via an RFID reader.
RFID-based mobile payments have become an attractive alternative to traditional payment methods that provide security, convenience, and affordability to both merchants and consumers. The technology has a vast potential for future growth, making it a promising option for businesses looking to expand their payment options. As more consumers adopt RFID mobile payments, we can expect this technology to continue evolving, providing even more significant benefits to users.
Advantages of RFID-based mobile payments
We’ve been using debit cards, credit cards and internet banking for payments for few years now but mobile payment is the new rock band in town having all our attention. It is easy, safe, and it is bound to be ubiquitous given the smartphone penetration across the world.
RFID-based mobile payments offer several benefits over traditional payment methods. Let’s see some of the benefits as follows:
The Convenience it Offers
RFID mobile payments are fast, easy and convenient; they allow consumers to pay without the need of carrying credit cards or cash. And given the fact that we carry our smartphones everywhere, it is only logical to use RFID mobile payments over any other means of payments.
Better Security than other methods
Apart from the convenience it offers, RFID mobile payment is more secure than traditional payment methods since they use encrypted data transmission, protecting the user's personal and financial information. Use of an application interface makes it more secure than other payment methods.
It is Cost-efficient
RFID mobile payments can cut costs associated with cash handling and credit card processing for merchants, resulting in higher profits for businesses. All the more reasons to use RFID mobile payments.
Contactless
Given the pandemic situation we had not so long ago, contactless payments are becoming increasingly popular and RFID mobile payments provide a perfect solution to that. There’s no going back from contactless payments due to security and the sheer convenience of just tapping your smartphone and walking out with the billed merchandise.
The Future of RFID-based mobile payment
RFID-based mobile payments continue to grow in popularity globally, and this trend is expected to continue. The market for contactless payments is projected to reach $4.60 trillion by 2027 from USD 1.1 trillion in 2020, with RFID-based mobile payments playing a significant role. Even countries like China and India, where cash was predominantly used, have witnessed a shift in consumer behavior towards increased adoption of mobile payments.
People now prefer contactless payments over handing out cash and giving the debit/credit cards at the POS, for obvious reasons, and that’s why RFID mobile payments are here to stay and the adoption is unprecedented.
To conclude, people always prefer convenience and security when it comes to spending money. While e-commerce has enabled online payments using net banking, wallet payments, and by use of credit or debit cards, people look for ways to make contactless payments while they shop in physical retail stores. Even though e-commerce saw an increase in years 2020-2022, retails stores are bouncing back post covid19 slump and RFID mobile payments are here to only add to the customer shopping experience and the growth of retail shopping.
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