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BANKS AND RETAILERS EXPERIMENT WITH CONTACTLESS AND MOBILE SYSTEMS

Payment technology is changing

SINCE the first contactless payment in Slovakia was made four years ago, the popularity of this way of paying for goods and service, together with ongoing technological improvements, has found growing interesting among consumers here. Surveys confirm that Slovaks would like to use contactless and mobile methods for payments, creating an opportunity for more extensive usage and it seems that merchants, banks, mobile operators and other businesses are responding to this demand.

SINCE the first contactless payment in Slovakia was made four years ago, the popularity of this way of paying for goods and service, together with ongoing technological improvements, has found growing interesting among consumers here. Surveys confirm that Slovaks would like to use contactless and mobile methods for payments, creating an opportunity for more extensive usage and it seems that merchants, banks, mobile operators and other businesses are responding to this demand.

The first contactless transaction in Bratislava was made on July 31, 2008 by a holder of a bank card issued by Volksbank Slovensko in cooperation with First Data, using MasterCard’s PayPass system.

“Slovakia is traditionally a country that is very inclined to novelties and break-through technologies,” said Ján Čarný, the then general director of MasterCard Europe for the Czech Republic, Slovakia and Ukraine at that time, as quoted in a press release issued by the institutions to note the occasion. “In the region of central and eastern Europe, Slovakia is one of the first countries in which the MasterCard PayPass technology has been introduced,” Čarný stated.

Since then other banks have embedded contactless methods to pay for goods or services and the banks believe prospects for its continual spread are high. Based on a MasterIndex survey conducted by MasterCard in Slovakia, interest by Slovaks in contactless payments using the PayPass technology has increased from 70 percent in 2011 to 76 percent in 2012.

Milan Laitl, the commercial director of MasterCard Europe for Slovakia, said that Slovaks like contactless payment because of its speed and security, no need to enter a PIN code as well as not needing to carry small coins or to physically have their bank card in their hands when paying. Currently, customers of eight banks operating in Slovakia can use the PayPass system to make contactless payments with 5,000 merchants by using a bank card, a phone or digital watch, or a special sticker.

Contactless payments are primarily designed for small transactions up to €20 and the holder of a Pay Pass card only taps the device, such as a phone or key chain, against the reader and the payment is executed. When paying a larger amount, the user must still enter his or her PIN code.

Laitl explained at a press conference in Bratislava in mid June that there are several kinds of devices for contactless and mobile payments. These devices, like bank cards, contain protected information which an appropriate reader can access to make a transaction. Banks can embed technology in a bank card that enables contactless payments or make a sticker that can be attached to devices such as a mobile phone. These stickers contain Near Field Communication (NFC) technology that provides wireless communication between electronic devices over a short distance. Laitl believes these stickers are a step towards more sophisticated methods of mobile payments.

“Actually, there are three types of mobile payments which consumers can use,” Laitl stated. “For the first one they need a mobile phone with a special chip or other equipment. The second type operates on the basis of an application which the person uploads into his or her mobile phone. The most universal one is the sticker which a person can attach to any mobile phone or other item.”

Laitl noted that the use a sticker may help people become accustomed to the new technology and new method of making small payments, adding that research and development is making huge progress but it is also necessary for consumers to learn how to use the technology and feel comfortable with it. Laitl said he see a gap here between what is already technologically possible and what people are actually willing to do.

Banking cards were launched in Slovakia roughly 15 years ago, Laitl said, and at that time some merchants were afraid of accepting them and it took some time until they became readily acceptable, adding that now it is a widely-used payment method. His opinion is that the same is now happening with contactless and mobile payments and he expects a boom in these forms of payment in the upcoming months and years.

More phone-based payments

Industry experts anticipate that smart phones will gradually develop into multifunctional devices that allow a person to pay for bus tickets, purchase fuel at petrol stations, and make various other kinds of purchases.

Smart phones may be used for making contactless payments if sensitive, personal bank data is properly embedded and protected in SIM cards, for example. Tatra Banka told the Sme daily that it is in negotiations with various mobile operators in Slovakia about future cooperation in this field.

Slovnaft, which operates 209 petrol stations across Slovakia, is also interested in launching contactless payments via smart phones. Slovnaft spokesperson Anton Molnár said the time frame in which NFC devices will be installed at its petrol stations depends on its partner bank, Slovenská Sporiteľňa.

Slovenská Sporiteľňa stated that it plans to announce its NFC technology before the end of this year.

“It will be designed for smart phones using the iOS and Android operating system,” said Štefan Frimmer, spokesperson of Slovenská Sporiteľňa, in mid May to Sme.

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