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Swiping your card or mobile to buy a coffee

SINCE the first contactless payment was made in Slovakia four years ago, the popularity of this method of paying for goods and service, together with ongoing technological improvements, has found growing interest among Slovak consumers. Surveys conducted by banks indicate that more Slovaks would like to use contactless and mobile methods for making payments, creating a demand for more extensive development. It appears that merchants, banks, mobile operators and other kinds of firms are responding to this rising interest.

SINCE the first contactless payment was made in Slovakia four years ago, the popularity of this method of paying for goods and service, together with ongoing technological improvements, has found growing interest among Slovak consumers. Surveys conducted by banks indicate that more Slovaks would like to use contactless and mobile methods for making payments, creating a demand for more extensive development. It appears that merchants, banks, mobile operators and other kinds of firms are responding to this rising interest.

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.

“The bank launched this card because we saw in it another possibility to move cashless payments to a new quality for the customer as well as the seller,” Jana Lukáčová, spokesperson for Volksbank Slovensko, told The Slovak Spectator. “Our expectations from four years ago have been fulfilled and other banks have embarked on this method of payment as well. We believe that as knowledge about this service gradually increases, its usage will grow too.”

Several banks in Slovakia have now embedded contactless payment methods in their cards. Some banks use MasterCard’s PayPass technology for cards issued in cooperation with MasterCard and some use the Visa payWave technology for cards issued by Visa. The biggest bank in Slovakia, Slovenská Sporiteľňa (SLSP), started issuing a contactless card in late April, Milan Bednár, the head of the card products department at SLSP, told The Slovak Spectator. UniCredit Bank Slovakia launched its contactless technology last year when it joined the Bratislava City Card project. Banks are also using stickers and watches with embedded contactless payment technology to make transactions.

“The assumption is that almost all payment cards will become contactless during the next two to three years,” Zuzana Ďuďáková, spokesperson of UniCredit Bank Slovakia, told The Slovak Spectator.
Contactless payment methods are primarily designed for small transactions up to €20 and the holder only swipes the bank card or other device, such as a phone or key chain, against the contactless reader and the payment is executed. When paying a larger amount, the user must still enter his or her PIN code.

Lukáčová specified that a contactless transaction takes only about seven seconds and that benefits the customer as well as the retailer. This method also reduces the need for coins and bills in cash registers and in the pockets of consumers. The banks told The Slovak Spectator that they view the risks associated with this payment method to be similar to other forms of cashless payment.

The banks indicated that they see greater interest from their customers in contactless payment methods and believe its popularity and expanded use will depend as well on the development of a broader network of places that accept contactless transactions.

“Contactless payments in Slovakia are only at their beginning as only 7 percent of cards and 15 percent of point-of-sale (POS) terminals are equipped with contactless technology,” stated Bednár. “We expect more usage in 2013, along with growing penetration.”

UniCredit Bank Slovakia also expects more contactless transactions.
“The current acceptance network is still not sufficient,” said Ďuďáková. “But the trend is very positive. The expansion of the acceptance network as well as an increase in the number of contactless payment cards issued in Slovakia is visible every day.”

Ján Podolský, the director of Printec, an IT company in Slovakia, believes that contactless payment methods will expand into self-service vending machines as well as sales of various kinds of tickets for transport, cultural events and similar services.

Milan Laitl, the commercial director of MasterCard Europe for Slovakia, 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 personal banking information which an appropriate reader can access to make a transaction.

Banks hope that expansion of Near Field Communication (NFC) technology, that provides wireless communication between electronic devices over a short distance, will bring more contactless payments.

“Banks and mobile operators are intensively negotiating over contactless mobile [phone] payments,” Ďuďáková told The Slovak Spectator, adding that these talks focus on whether the technology should be embedded into the SIM card or directly into the memory card of a mobile phone and how costs and profit will be divided. She said UniCredit Bank Slovakia believes that contactless mobile payments will be common in Slovakia next year.

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