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The battle between chip cards and wallets

06/21/2016 10:25
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Virtual wallets have led the way to a revolution in how we pay. Their convenience and speed are key characteristics in their fight against credit cards. 


Credit card payments are becoming increasingly boring for retailers and hospitality providers. Now, because of chip credit cards they have to wait ten seconds on average for the transaction to go through; whereas in the past the traditional magnetic stripe cards allowed them to print a receipt in just a few seconds.

According to a report by Iovation and Aite Group, by the end of 2016 80% of credit cards in the USA will include a chip to prevent fraud. This technology has been used in Europe for over a decade but it's only recently been introduced to North America.

Many retailers may reject payments with chip cards because it takes longer to pay since the transaction needs to be approved.

As an alternative to this type of card, we can use virtual wallets. Several technology companies such as  AppleSamsung and Google have been developing this type of technology for two years. Even though it is a quicker and more convenient method of payment, it is still not widely used.

While chip card payments take about 10 seconds on average, payments with virtual wallets take half the time, i.e. about five seconds.

Also, transactions with wallets are also more secure because they use authentication through digital fingerprinting and, as such, reduce fraud almost completely.

To pay using virtual wallets, stores must have POS that recognize the contactless payment system. One year ago this could have been a problem but current wide-spread use makes it easier to find retailers with this type of readers.

Interest in wallets has gone beyond technology companies. Financial institutions are also developing or implementing this technology. BBVA has been one of the first Spanish banks to implement this innovation with its BBVA Wallet.  From its application users can pay using their cell phone, manage their cards and control their account activity quickly and intuitively.

Comparison between Android, Apple and Samsung wallets:

  Accepted by Supporting banks devices
Android 64 retailers 48 banks in the USA Any Android smartphone with gaming services for Google
Apple 2.5 million retailers Over 2,500 banks in the USA, UK, Singapore, China and Australia iPhone 6 and 6S, SE devices and Apple watch
Samsung 90% of major retailers in the USA 130 banks in the USA Galaxy Note 5 and S6 and S7 devices

Source: New York Times

More information: Ebook: new wallets