Wave of the futureSo what's being showcased in London? Arguably the most important innovation is so-called "wave-and-pay" technology, which allows you to complete a transaction simply by waving your enabled credit card or smartphone close to a point-of-sale (POS) terminal that is compliant with near-field communications (NFC) standards. For small purchases (in London up to £20, or about $31), you don't have to key in a PIN or sign your name to authorize the payment. This technology already exists in the United States, mostly in the form of Visa's payWave or MasterCard's PayPass services, and is currently being rolled out across the nation. However, Visa says that it alone already has 37 million wave-and-pay cards in circulation in Europe, and 140,000 compliant terminals just in the UK. Of the latter, 5,000 are installed in London taxis, which sounds like a smart idea.
Credit cards with chipsWhere American credit card companies have seriously lagged behind the rest of the developed world is in the adoption of "EMV," the technological standards behind cards that come with embedded microchips. Instead of using the black magnetic stripe to interface with payment networks, EMV cards use their chips, which are encrypted and inherently more secure. Small wonder, then, that EMVCo reported, in January 2012, that there are more than 1.3 billion EMV cards in circulation worldwide, of which 740 million are in Europe. Stateside, we can expect to see EMV plastic very soon. All the big payment networks have already announced roadmaps that should see most terminals being compliant over the next couple of years, and many credit card companies have said that they intend to issue chipped cards very soon. Just in July 2012, American Express and Bank of America unveiled their plans to begin rolling these out this year.
Not without a few bugsAs with all new technologies, don't expect everything to go entirely smoothly when EMV and wave-and-pay technologies are being rolled out.
Also in July, researchers demonstrated at the Black Hat USA 2012 security conference that EMV POS terminals could be hijacked in a way that might allow criminals to steal credit card data and PIN numbers. To be fair, this has so far been a purely theoretical weakness, and nobody has yet been a victim of such crime.Meanwhile, there were a few red faces in San Francisco, CA, during the Olympic Games when Visa found itself showcasing an epic failure of its new technologies. The company paid a fortune to be a worldwide partner of the London 2012 games, and this sponsorship gave it certain exclusive rights. Having ripped out most of the existing ATMs at London's Wembley Stadium because they weren't branded Visa, the company then experienced a local network failure that one evening left tens of thousands of soccer fans with no way to buy their refreshments or souvenirs. Well, no way except cash, something that many didn't have enough of because they planned to use their plastic.