Definition - What does Contactless Payment System mean?
A contactless payment system is an innovation in point-of-sale payments that does not require the traditional transactions used in either cash or conventional credit or debit card design.
Connectivity is often achieved by radio-frequency devices. Users just have to place a card or another item in proximity to a piece of cashiering hardware in order to complete the transaction. No PIN numbers or other verifications are required.
Because of the less stringent security arrangements of the contactless payment system, this system has been slow to be adopted in conventional retail. Companies like McDonald's have been experimenting with contactless payment systems for some years. Now, innovators like Apple offer contactless payment systems.
Another good example of a contactless payment system is an RFID device commonly used for highway or local road toll systems. Contactless payment systems have been adopted recently in highway toll systems because the convenience they provide overrode security concerns. That same philosophy, however, has not yet been adopted in general retail, where many buyers and sellers prefer using a card with qualifiers like PIN numbers.