October 28, 2016
The abolition of cash due to new electronic payment options is on everyone's radar. More and more banks are issuing contactless cards and the number of merchants accepting Near Field Communication (NFC) cards is growing steadily.
So, as part of the next step, why not shrink your credit or debit card and simply have it implanted as a chip in your hand or upper arm? It may sound like science fiction, but this idea has already been adopted by many ‘cyborgs’ worldwide.
Sascha Breite, Head of Future Payments at payment specialists, SIX Payment Services, examines the advantages and disadvantages of these chip implants and how this payment method might work in everyday life.
To start with: chip implants are not a real trend yet. We are seeing a few enthusiastic ‘techies’ and innovators ‘self-test’ these implants, be it to try a new experience, demonstrate the opportunities in the payment world and also highlight the challenges that are yet to be overcome.
There are diverse areas of applications for implanted NFC chips. For example, consider opening doors to cars and houses, payment at the supermarket checkout, access to secure areas and also checking in and out of public transport. Chips could also be used to control the mobile phone, for example making it automatically perform certain tasks when the phone is being lifted, e.g., unlock or link to a loudspeaker. While this may sound convincing and indeed increasing usability, it is, of course, necessary for the appropriate infrastructure to be widely rolled out.
NFC chips can store a variety of data such as medical records, account numbers, access or contact information. This data could be open to hacking, as – similarly with NFC cards – the implanted chip would only need to be in the vicinity of an NFC reader to be accessed. One could always add another layer of protection, such as entering a PIN number, like with any other NFC device. But unlike cards, watches or mobile phones, an implanted chip is difficult to be locked away in a safe when not used.
The current rate of technological development limits the possibilities for chips at the moment. Once implanted, the chip can be loaded with new data, but the simultaneous use for various applications and secure card payments is currently not possible.
Before being implanted, a chip would have to be programmed and personalized in order to work with VISA or Mastercard, which cannot be changed at a later date. In addition, the chip would expire – just as with ordinary cards – every two-three years, and the user would have to have their implant regularly removed and replaced.
Trend researchers are convinced that NFC technology will prevail in many different application areas. The "Internet of Things" also supports this, as NFC chips provide a convenient and secure identification of the user. Realistically, however, as NFC chip technology further develops it will inevitably require hardware upgrades, e.g., the implants will need to be replaced.
In the next few years, we don’t expect to see the payments landscape to incorporate NFC chip implants to a large extent. Aside from the rather unpleasant procedure of the ‘installing’ the implant itself, there are not enough benefits associated with this form of payment to warrant a rise in usage. Having said that, we do anticipate the NFC technology to continue its triumphant march through the payments world in a variety of form factors, be it with phones, tablets, cards or wearable technology.