Which payment tool is safer, physical credit card, mobile NFC (near-field communication) or QR code? That was a widely-discussed topic in Hong Kong recently.
Owning a platinum or black credit card used to be a status symbol. However, banks have issued an excessive amount of these credit cards in recent years. Even college students are able to obtain platinum cards nowadays from some banks.
Moreover, physical credit cards might be lost or stolen, and someone can steal the information to make purchases in stores or online. Frankly speaking, most shops won’t verify the signature on back of the card.
NFC-enabled cards like Octopus have been used for over two decades. Octopus card is a debit card rather than a credit card, and it’s convenient to pay for small amounts.
Apple Pay, Samsung Pay and Android Pay are also based on NFC technology, which allows two devices placed within a few centimeters of each other to exchange data and complete a transaction.
These are all digital wallets with embedded credit cards. A one-off token is generated when NFC-enabled devices are placed near the payment terminal in order to ensure safe payment.
The main drawback of traditional credit cards and NFC-enabled cards is that merchants have to install payment terminals. That means they have to pay monthly fee for the terminals in addition to handling charges to banks, adding to the cost pressure.
Amid this situation, QR code is getting popular largely because it can do without a terminal. A smart phone with built-in camera is enough to process a transaction based on this technology.
Some people fear that QR code payment may have security risks. But a one-off QR code with time limit could considerably mitigate that risk.
Given the proliferation of smartphones and the merits of QR code-based payment, I believe it will continue to gain traction. Meanwhile, credit cards may be phased out at some point.
This article appeared in the Hong Kong Economic Journal on Nov 23
Translation by Julie Zhu
[Chinese version 中文版]
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