In Brief (TL;DR)
A journey into the evolution of contactless technology: from the first pioneering credit cards to its integration into today’s smartphones and wearable devices.
Let’s retrace the stages of this revolution: from early experiments with RFID technology to the affirmation of the NFC standard, which brought "tap and go" to cards, smartphones, and smartwatches.
Up to the integration into smartphones and wearable devices, which have transformed digital payments into a simple and secure daily gesture.
The devil is in the details. 👇 Keep reading to discover the critical steps and practical tips to avoid mistakes.
A simple and quick gesture that has become part of our daily lives: tapping a card, a smartphone, or a watch on a terminal to pay for a coffee, a bus ticket, or groceries at the supermarket. Contactless payments have transformed our habits, making transactions faster and more immediate. But how did we arrive at this silent revolution? The journey of contactless payments is a fascinating trip intertwining technological innovation, cultural changes, and new market needs, with a particularly interesting evolution in the Italian and European context.
This technology, which we take for granted today, has its roots in decades of research and development. The idea of exchanging information without direct physical contact is not new, but its application to mass payments took time, standardization, and, above all, the trust of consumers and merchants. A change that in Italy, a country historically tied to cash, takes on even more significant contours, marking a meeting point between tradition and digital innovation.
Technological Origins: From RFID to NFC
The history of contactless payments begins well before the credit cards we know today. The fundamental technology is RFID (Radio-Frequency Identification), a radio frequency identification system whose origins go back as far as World War II. The first true RFID transponders, devices capable of transmitting and responding to radio signals, were developed in the 1960s and found application, for example, in vehicle recognition at highway toll booths. However, it was only in the 2000s that miniaturization allowed for the insertion of passive RFID chips, i.e., without a battery, inside objects like cards. This step was crucial for the birth of the first “contactless” payment cards.
The real turning point came with the evolution of RFID into NFC (Near Field Communication) technology. NFC is a form of short-range wireless communication that operates at a maximum distance of a few centimeters, making it ideal for secure transactions. Unlike RFID, which is often unidirectional, NFC allows for bidirectional data exchange between two devices. This feature opened the doors to integrating the technology into smartphones, transforming them into true digital wallets starting with the first experiments around 2006-2007 with services like Google Wallet.
Diffusion in Europe and the Italian Case
The adoption of electronic payments in Europe presents a varied picture, strongly influenced by cultural factors, financial education, and government policies. Northern European countries, such as Denmark, Sweden, and Finland, have been leaders in the use of digital tools for years, with a very high number of per capita transactions. Conversely, Southern European nations, including Italy, show historically lower adoption rates, although recording faster growth in recent years. Despite a position still lagging in the European ranking for the number of per capita transactions, Italy is experiencing a phase of strong acceleration.
According to recent data, Italy ranks fourth in Europe for the growth of cashless payments, with a 23.2% increase compared to the previous year. An important signal is the decrease in the average receipt paid by card, indicating increasingly frequent use of the tool even for small daily expenses, once the exclusive domain of cash. The pandemic certainly accelerated this transition, pushing consumers and merchants toward solutions considered more hygienic and secure. Today, almost all POS terminals in Italy are enabled for contactless, and the diffusion of cards equipped with this technology is widespread.
From Cards to Smartphones: The Era of "Tap & Go"
The evolution did not stop at plastic cards. The integration of NFC technology into smartphones kicked off a second wave of innovation, leading to the birth of digital wallets like Apple Pay and Google Pay. These "electronic wallets" do not directly contain card data, but "tokens," i.e., surrogate and secure versions of payment information, which are exchanged with the POS at the time of the transaction. This has made contactless payments even simpler and more accessible, leveraging a device we always have with us.
The success has been overwhelming. In Italy, in 2024, almost 9 out of 10 payments made by card in stores took place in "tap & go" mode, for a total value of 291 billion euros. Of these, an increasingly consistent slice is represented by payments made via smartphones and wearable devices, which reached a transaction volume of 56.7 billion euros, with a growth of 53% compared to the previous year. This boom demonstrates how Italians are enthusiastically embracing the convenience and speed of these new solutions.
The Historic Overtake and the Future of Payments
A historic figure marks the depth of the change underway: for the first time in Italy, in 2024, the value of digital payments exceeded that of cash transactions. Electronic instruments accounted for 43% of consumption, against 41% for banknotes and coins. This overtake is not just a statistical figure, but the symbol of a cultural transformation seeing Italy move toward an increasingly cashless society, in line with the rest of Europe. The decisive push came precisely from innovative solutions, particularly from the contactless world.
The future seems charted and points toward an even more integrated and invisible payment experience. New frontiers include wearable devices, such as smart rings and bracelets, which make payment an even more natural gesture. Technologies like biometrics, replacing the PIN with a fingerprint, promise to further increase security. The Internet of Things (IoT) will also play a role, with everyday objects potentially becoming payment tools. In this constantly evolving scenario, how NFC technology works remains the engine of an innovation that shows no signs of stopping, simplifying our daily lives, one "tap" at a time.
Conclusions
The history of contactless payments is a clear example of how technological innovation can gradually, but inexorably, modify deeply rooted habits. Starting from niche technologies like RFID, we have arrived at an integrated, fast, and secure digital payment ecosystem that is redesigning our relationship with money. In Italy, this path has had the characteristics of a true cultural revolution, a bridge between the tradition of cash and a digital future. The historic overtaking of cash by electronic payments is not an arrival point, but a fundamental stage of a journey that will continue to surprise us with new solutions, such as disposable virtual cards, making our economic interactions increasingly simple and secure.
Frequently Asked Questions
How do contactless payments work?
Contactless payments rely on NFC (Near Field Communication) technology, an evolution of RFID, which allows two devices to exchange data wirelessly at a very close distance (usually less than 4-5 centimeters). A contactless card or a device like a smartphone contains an NFC chip. When brought close to an enabled payment terminal (POS), the POS emits a radio frequency signal that "activates" the card or device chip, initiating an encrypted data exchange to authorize the transaction in a few moments. This process eliminates the need to physically insert the card or swipe the magnetic stripe.
Are contactless payments safe?
Yes, contactless payments are considered very safe for several reasons. First, NFC communication occurs only at an extremely short distance, making it very difficult for malicious actors to intercept data. Second, the transmitted information is encrypted and often uses a "tokenization" system, where real card data is never shared with the merchant but replaced by a unique code for that specific transaction. Furthermore, European PSD2 regulations impose security limits, such as requesting the PIN after a certain number of consecutive operations (usually 5) or upon reaching a cumulative amount (in Italy 150 euros), to verify the holder’s identity.
What is the difference between RFID and NFC?
RFID (Radio-Frequency Identification) is the parent technology from which NFC (Near Field Communication) derives. The main difference lies in the mode and range of communication. RFID can operate over longer distances and communication is often unidirectional: a reader queries a passive tag that responds with its information. NFC, on the other hand, operates only at very short range (a few centimeters) and allows for bidirectional communication, meaning two devices can both read and write information, talking to each other. This bidirectional capability is what makes NFC ideal for complex and secure applications like mobile payments.
Why has Italy lagged behind in digital payment adoption compared to Northern Europe?
The delay of Italy and other Southern European countries in adopting digital payments is linked to a mix of cultural, structural, and economic factors. Historically, in Italy, there has always been a strong preference for cash, perceived as more immediate and easier to control. Added to this are lower digital financial literacy compared to Nordic countries and some initial distrust regarding the security of electronic transactions. Furthermore, the retail structure, with a strong presence of small businesses, slowed down the widespread diffusion of POS terminals in the past. Although recent growth has been very rapid, bridging part of the gap, these cultural roots explain the slower start compared to nations with a more consolidated cashless culture.
What is the future of contactless payments?
The future of contactless payments is moving toward an even more integrated and "invisible" experience. Main trends include the expansion of wearable devices, such as rings, bracelets, and even smart clothing, which will allow paying without even having to take out a smartphone. Another frontier is biometric payments, where authentication will take place via fingerprint or facial recognition, completely eliminating the need for PINs and passwords. Finally, integration with the Internet of Things (IoT) is being explored, which could allow connected objects, like a car or a refrigerator, to make payments autonomously.
Frequently Asked Questions
A contactless payment works thanks to NFC (Near Field Communication) technology, a short-range wireless communication. Inside the card, smartphone, or smartwatch, there is a small chip with an antenna. When you bring the device close to an enabled payment terminal (POS), the two communicate with each other, exchanging the data necessary to complete the transaction securely and encrypted in a few seconds, without needing to physically insert the card.
Contactless payments are designed to be very safe. Communication between the card and the POS occurs only at a very close distance (a few centimeters), making remote data theft almost impossible. Furthermore, transmitted information is encrypted. For small expenses, in Italy up to 50 euros, the PIN is not required for speed, but for higher amounts, authentication is always necessary. Additional security limits exist, such as a cumulative amount (usually 150 euros) or a maximum number of consecutive transactions (usually 5) without a PIN, after which inserting it is mandatory to verify the holder’s identity.
The 50 euro limit for contactless payments without a PIN is a security measure established at the European level to balance convenience and protection. This limit serves to reduce risk in case of card theft or loss: a malicious actor could only make small purchases before the card is blocked. For any amount over 50 euros, the system mandatorily requires entering the PIN code or another form of authentication (like facial recognition or fingerprint on a smartphone), thus ensuring a higher level of security for larger transactions.
Contactless payments began to spread significantly in Italy in the last decade but have seen exceptional acceleration in recent years. In 2024, Italy ranked fourth in Europe for the growth of cashless transactions. Indeed, for the first time, the total value of digital payments exceeded that of cash. Today, almost 9 out of 10 transactions made by card in stores occur in contactless mode, demonstrating how this technology has become a daily habit for most Italians.
Yes, in almost all cases. If a store displays the contactless symbol (the four waves), its POS terminal is capable of accepting payments not only from physical cards but also from smartphones and smartwatches equipped with NFC technology and payment apps like Apple Pay or Google Pay. Paying with a phone offers an additional level of security because every transaction must be authorized via facial recognition, fingerprint, or device unlock code, effectively eliminating the 50 euro limit without authentication provided for cards.
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