The tiny but intriguing radio frequency identification chip is already being used for contactless payments and could eventually be part of the euro note. But it also lends itself to applications for improving client services. Chris Skinner explains.

It is strange that only a few years ago, there were simple payments: cash and barter. Now, there is a myriad of payment methods from internet exchange mechanisms to mobile telephone SIM cards to EFTPOS to cheque, cash, SmartCard, RFID chip and so on. The one that is intriguing is the RFID chip.

RFID stands for radio frequency identification. The RFID chip is a wafer-thin, tiny computer chip that can be implanted into anything from a shoe to a glass to a credit card. Today, such chips are used to tag dogs and cats. Putting a chip in a pet ensures the pet is returned, if lost, because the chip carries details of the owner’s name and address.

In commercial operations, RFID is mainly discussed in the context of bar codes for retailers. RFID allows retailers to have an intelligent chip on every item of stock to ensure that they can track inventories and stock movements.

In payment terms, RFID has been used successfully in a range of programmes, including the Oyster Transport Card in London, UK, the Octopus Card in Hong Kong and the MasterCard PayPass programme in the USA. Each programme allows a card to be held over a recognition unit and a payment to be taken without a signature or PIN. That is the idea of a contactless payment: there is no touch involved, just a wave of a card and the payment is made. This is because the recognition unit exchanges a chip-to-chip recognition and authorisation process that allows secure transaction processing.

RFID chips are now being discussed in a wider context: for example, with a view to incorporation into every euro note to ensure note integrity and tracking – although money launderers are nervous about the prospect of an RFID chip tracking where notes have come from and are going to.

There is also discussion about the chips being used to improve client services. Using a mixture of intelligent sensor chips (also RFID) built into branch fixtures such as doors, counters and teller stations, the bank recognises a client’s RFID card chip before they enter the branch to alert the branch personnel of the client’s impending entry. As a result, branch managers can allocate personnel to service specific clients based on the pre-recognition of the client’s needs through the chip-to-chip monitoring.

Within the next few years, it is likely that RFID – alongside PIN, SIM and biometrics – will all work together in improving security, servicing, authentication and authorisation. The challenge will be to keep up with the myriad of payment options and educate consumers and clients of the benefits of such changes.

Chris Skinner is founder of Shaping Tomorrow and chief executive of Balatro Ltd. Find out more at or e-mail Chris at


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