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Out-Law News 2 min. read

MasterCard backs contactless payments technology by mandating changes to point-of-sale terminals


European retailers looking to install new point-of-sale terminals from 2016 will have to buy systems that facilitate contactless payments if they want to support payments with MasterCard, the payment card giant has announced.

MasterCard said retailers in Europe have until the 1 January 2020 to replace existing POS terminals with ones that support contactless payments if they want to be able to accept consumer payments with MasterCard or Maestro from that date.

The company said that the move will allow consumers greater opportunity to make mobile payments using near-field communications (NFC) technology. Research shows that there is to be a "fourfold" increase in the number of mobile devices supporting NFC technology in the next fives years, it said.

NFC technology allows contactless payments to be made using radio waves to transmit data between devices that support the technology. To effect a payment, the compatible device and terminal must be in close proximity in order for there to be a connection and for the data transmission to work. 

“Europeans can already use contactless cards or NFC enabled mobile payments in 36 countries across Europe and their enthusiasm for this safe and simple way to pay is evident," Javier Perez, president of MasterCard Europe, said in a statement. "MasterCard wants to ensure that mobile and contactless payments are safe and simple wherever you are in Europe making it easy to pay how you want when you want."

Technology and payments law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said there is a need for technical standards to "ensure that NFC-enabled POS terminals work with both cards and the growing number of enabled mobile devices".

MasterCard confirmed to Out-Law.com that its deadlines for adopting new POS devices for accepting MasterCard payments applies equally to large and small retailers and that an exception would not be made for businesses using lightweight POS devices.

"Our new contactless standard is announced to ensure that those with mobile devices can tap to pay wherever MasterCard is accepted, and takes into account the fact that mobile devices cannot be dipped or swiped into readers without contactless function," a spokesperson for MasterCard said. "As the supply chain for acceptance devices, including mobile POS devices, is becoming developed to support contactless it is the right moment to set the vision and aim for 100% acceptance coverage.  This is why both mobile POS devices as well as small and large retailers are included in the new standard." 

"As there is quite a good lead time for existing retailers to come into compliance, there should be sufficient time for those readers to fully depreciate and go through normal replacement cycles so as not to cause undue burden on retailers," they said.

MasterCard said that a study into consumer attitudes to contactless payments revealed that the UK and France are among the European countries where the appetite for contactless payments is greatest.

“In 2013 alone the number of MasterCard and Maestro contactless transactions across Europe tripled and the volume spent on those transactions increased four times," Chris Kangas, MasterCard's head of contactless payments in Europe, said. "Contactless users tell us on social media that they love tapping and want to tap more. [This] announcement is a much needed stake in the ground, marking the next milestone for contactless.”

MasterCard's announcement comes just days after Apple revealed that it was entering the mobile payments market.

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