Contactless payment is a new method using chip-based technology that removes the need to swipe or insert a card physically into a terminal reader. The card's data are sent via radio frequency when the card's owner simply holds it in front of a reader at close range.

This form of payment allows a faster, safer and more convenient transaction, particularly in places that require speedy payment, such as fast-food restaurants and convenience stores.

Initially, the contactless card will be introduced by issuers currently offering the Visa chip credit card: Bangkok Bank, Siam Commercial Bank, Kasikornbank, Citibank, Krungthai Card and Krungsriayudhya Card.

Somboon expects the new card to receive a good response in Thailand. "We expect 20,000-30,000 contactless cards to be issued by the end of the year, with about 1,000 card readers set up," he said. "That figure should increase to 100,000 cards next year."

Card issuers will each need to spend about Bt100 million this year to upgrade their technology for contactless cards. The new card costs about Bt200, compared with Bt100 for a chip card. Contactless card readers cost Bt4,000 to 5,000 per unit.

Somboon forecast that card issuers would reach breakeven point on their investment within 18 months to two years. The breakeven period for technology investment in debit cards is only about six months, with this sector needing less marketing than credit cards.

Although the contactless card provides greater convenience to cardholders, security is a concern, particularly in cases in which the card is lost, and other people use it easily. As a safeguard, cards have a credit limit, and holders are required to sign a sales slip after payment. However, in some countries, there is no need for a signature.

A Visa survey found that one in five Thai consumers was familiar with contactless cards. But only one in 10 has used one, and even then mainly at convenience stores. This indicates that Thailand is a good potential market.

Visa's product has been launched successfully in Malaysia, Taiwan and South Korea. There are currently 1.2 million Visa contactless cards.

Somruedi Banchongduang

The Nation