This weekend marks an anniversary. Although Consult Hyperion’s romance with smart cards had started many years before that, it will be fifteen years on Sunday that chip and PIN went live in the UK. I remember St. Valentine’s Day 2006 as if it was yesterday!

Roses are yours
Violets are mine
In Blighty we PIN
The Yanks still sign

There were very few teething troubles as people switched over from signing to entering a PIN. Most of the fears about queues in retailers as people tried to remember their PINs were never realised and in a pretty short time, the terminals were a fact of life. That’s not to say that in the early days, even I got my credit and debit PINs mixed up and sometimes entered the wrong one.

Violets are fat
Roses are thin
I’d buy you flowers
But I forgot my PIN

But as PIN change rolled out to ATMs, I did what everyone else did and changed all my PINs to be the same and that problem was solved. Chip and PIN was up and running and I haven’t had the slightest problem with it for so long as I remember. In America, I was still signing transactions but everywhere else in the world that I went, my PIN worked perfectly. It probably still does, although I can’t say for sure because it’s quite some time since I used my PIN.

Roses are red
Violets are blue
It’s online anyway
So, a tap will do

Why? UK Finance data shows contactless transactions rising about a sixth, month on month at the moment and almost 90% of card transactions in the UK are now contactless. Contactless debit card transactions alone account for two-thirds of all retail payments and across Europe as a whole around half of all POS transactions are now contactless. The fraud rates on contactless cards are lower than for cards in general (because of fully online authorisation) and the limits on contactless payments are being raised in many countries. The Financial Conduct Authority (FCA) has announced that it will soon consult on enabling a possible increase in the contactless payment limit from £45 to £100.

Roses have thorns
I pricked my thumb
Who cares about PINs
Contactless won

It isn’t just that contactless cards won: contactless won. As I write this article, I haven’t used my debit card in a shop since I don’t remember when (I only use my debit card to get money out of an ATM when I need, against my better judgement, to use cash for something) and I although I do use my credit card in shops from time to time, I can’t remember when I last did so. Generally speaking I don’t take my wallet with me when I go out because I use my phone in all of the shops I go to. When I was finally able to load my supermarket loyalty card into my Apple wallet, I lost the last reason to take my wallet anywhere (as we have always told our clients, wallets are about identity, not money).

Roses are red
Violets are blue
I lost my card
But my phone will do

There was always a philosophical problem with chip and PIN that bothered those of us coming from the more extreme end of the digital identity spectrum, and it is this: we shouldn’t have taught people to authenticate to devices that are not under their control. In other words, teaching people to put their PINs into other peoples’ terminals, phones, keypads and so on was creating a weak link. It is much better, conceptually, to have people strongly authenticate themselves against revocable tokens in tamper-resistant memory. In other words, Apple Pay. Strong biometric authentication against my phone means that the supermarket never sees my biometric, which never leaves my device, and is given a token that only my bank can connect to my account. All in all, it’s a much better arrangement. And it works very well indeed.

Roses are red
Give me some skin
QR is quick
So scan me in

It is not simply that we are going contactless instead of PIN, it is that we are going contact-free instead of cards. In recent times the pub, the garden centre, the airport lounge and the coffee shop I visited all had their “last mile” connection to the customer (in this case, me) through QR codes. Just look around and see how quickly the technology, already ubiquitous in China, has permeated the customer experience here.

There are a few reasons for this. The cameras in mobile phones have improved across the board so QR codes can be scanned clearly from a distance. Apple changed the iPhone software so that you could scan QR codes with your iPhone camera and not have to run a separate app. The pandemic drove the demand for safely distanced transactions for everything, not only shopping, and QR codes were there.

Roses are red
Violets are blue
Where’s my card
Did I give it to you?

I can’t help but reflect that on the 15th anniversary of the launch of chip and PIN, and two decades after we started working on the offline card payment mechanism of the future, off the top of my head I can’t remember the last time that I used either the card or the PIN to buy anything at all.

Roses are good
Violets are bad
What’s a “card” Mum?
Did you have one, Dad

At Consult Hyperion we’ve helped to develop this market from being a gleam in a committee’s eye, through the very first chip and PIN cards, through contactless transactions (we built the terminals by hand!), and onto iPhones and other devices. We were the consultants to Transport for London in what I still consider the most important project in the history of contactless cards, which was the open-loop migration for the capital’s transit system.

Here’s to the next fifteen years of innovation in this amazing business!

David G.W. Birch

David G.W Birch is an author, advisor and commentator on digital financial services. He is a Global Ambassador at Consult Hyperion (the secure electronic transactions consultancy that he helped to found), Technology Fellow at the Centre for the Study of Financial Innovation (the London-based think tank), a Visiting Professor at the University of Surrey Business School and holds a number of board-level advisory roles. Before helping to found Consult Hyperion, he spent several years working as a consultant in Europe, the Far East and North America. He graduated from the University of Southampton with a B.Sc (Hons.) in Physics. Dave was named one of the global top 15 favourite sources of business information (Wired magazine) and one of the top ten most influential voices in banking (Financial Brand); was found to be one of the top ten Twitter accounts followed by innovators, along with Bill Gates and Richard Branson (PR Daily); was ranked in the top three most influential people in London’s FinTech community (City A.M.), was voted one of the European “Top 40” people in digital financial services (Financial News), was listed of the world’s top 100 most influential FinTech leaders (Hot Topics) and rated Europe’s most influential commentator on emerging payments (Total Payments).

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