Reasons to Adopt RFID-Based Payment Solutions

Consumer habits have changed dramatically since the boom in online shopping. Due to COVID-19, the entire fashion sector was forced to change its commercial strategies overnight and this led to the closure of many independent retailers, many of which, unfortunately, have never reopened.

The future is of RFID technology. The microchips and tags that today make it possible to speed up and improve the identification and traceability of goods, livestock and luggage in the not too distant future will also have an ever greater importance for our daily life.

More and more customers are shopping online and some are even worried about entering a store; adopting new technologies is certainly one of the ways in which retailers can create added value that does not fear comparison with online shopping.

Let’s take the example of Zara. In 2017, the Spanish clothing retailer implemented RFID technology in the mirrors of its dressing rooms to enhance the customer experience. These “smart mirrors” advised customers on items that matched what they chose to try in the dressing room.

At the time, at least in Western Europe, it was considered a new technology; however, it is already since 2016, the year in which it was presented at the Combined Exhibition of Advanced Technologies, that this technology has been successfully implemented in Japan. Zara, along with smart mirrors, has also installed a self checkout payment solution that uses RFID technology to facilitate rapid label scanning. One example is the Oxford Street store in London.

Decathlon, a famous French chain, is using RFID tags by linking them to security tags for electronic item control, especially for high value goods such as snowboards, skis and surfboards.

Also Decathlon, in the Netherlands, to facilitate payment by smartphone, has already planned a scan-and-go service, in which the RFID tag is disabled immediately after the end of the transaction. It’s these small changes in flexibility and transparency, particularly in a post-COVID world, that will encourage shoppers to return to the store.

According to a recent study by Adrian Beck of the University of Leicester, retailers using RFID tags can expect a 5.5% increase in sales. A survey of various apparel and food retailers (Marks & Spencer’s, Tesco, Decathlon, Adidas, C&A, and others) who had a number of small and large-scale RFID systems found that all businesses experienced increased sales between 1.5% and 5.5% after the implementation of this technology.

There are, of course, many other advantages linked to RFID solutions, from anti-theft systems to personnel attendance management, but the results are always unanimous. For clothing stores, the use of RFID not only helps to improve the customer experience in the store, but is an essential tool to offer the retailer the peace of mind that only total visibility can give.

The fields of application of this technology demonstrate this. The tags for radiofrequency identification (this is the full name of the acronym RFID) are widely used in everyday life, not only in the industrial sector. Let’s find out some applications of RFID-based payment solutions.

Electronic Passport

Introduced for the first time in 1998 from Malaysia, the electronic passport is now a reality also in Italy. It arrived in our country in October 2006 and since then all the identification documents issued by the Italian Police Headquarters contain an ISO 14443 type RFID microchip. This tag stores all the information contained in the paper version of the passport, so that they can also be received by a digital reader. In addition to our general information, the RFID tag also contains the digital version of the photo printed on the passport.

Contactless Payments

Many banking institutions and others are increasingly developing contactless payment system that will gradually replace credit cards and other electronic payment systems such as ATMs. Thanks to the NFC protocol, a short-range evolution of RFID technology, in the next few years it will be possible to pay for the cinema, shopping or dinner at a restaurant by simply touching the smartphone to a special reader.

The Ticket Restaurant Mobile is just one of the many applications of RFID in this field: PostePay Postemobile is one of the Italian projects further ahead in the development process but giants such as Visa and Mastercard are also introducing credit cards with RFID tags instead of chips and magnetic strips in our country.

Ticket Office

A sector that seems to be able to derive many advantages from the use of microchips and RFID tags is that linked to the issuance of tickets for events (music, cinema, art, etc.) and travel. Major European cities already use RFID tickets to regulate access to public transport rest areas – especially access to light rail and metro stations. Even the entrance systems to the ski lifts on many ski slopes are now regulated by this technology and, again thanks to NFC, many airlines are automating boarding operations.

The use of RFID tickets does not only benefit travelers in terms of time and elimination of lines. Public transport companies, for example, can also leverage data from RFID tags on tickets to their advantage. In a very extensive and, in some ways, chaotic transport system like the London one, the possibility of exploiting the traceability data of RFID microchips allows you to monitor the flow of travelers and anticipate possible problems due to overcrowding and congestion in the various stations of the meter.

Road Toll

On the motorway network of many countries – including Italy – motorists are offered the possibility to pay the toll automatically using RFID tags. The Telepass system is a prime example of this. Passing through the electronic toll booth, motorists will no longer have to stop to pay the due but their transit will be picked up by sensors installed in the asphalt and recorded by the central computer system. At a later stage, this data will be used to debit the cost of the toll directly from the driver’s bank account or credit card.

Author Bio:

Nikunj Gundaniya, Product manager, one of the leading digital wallet app development company USA, which provides mobile finance application development services. He is a visionary leader whose flamboyant management style has given profitable results for the company. He believes in the mantra of giving 100% to his work.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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