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From Chip-and-Pin to Chip-and-Skin

From Chip-and-Pin to Chip-and-SkinOver the last few years, chip-and-PIN has been heralded as the gold standard in payment security. These EMV credit cards come with embedded chips that are next to impossible to clone. To initiate an in-store payment, customers must input a personal identification number (PIN) that only they know. 

Additionally, mobile payments and wearable technologies continue to grow in popularity every year. In fact, experts predict that annual in-store sales generated through smart devices could exceed $500 billion by 2020 — in the United States alone. 

It’s hard to imagine how you can improve on the security of chip-and-PIN or the convenience that mobile payments offer. Yet, developers continue looking for payment options that are even more secure and convenient — because credit cards are too easy to leave at home. Plus, even phones get lost, damaged or stolen from time to time. 

But you know what American consumers always have on them? Their skin. 

When Mobile Payments Get Under the Skin

A new breed of “mobile” payments are on the horizon, and they use a very unusual method for connecting customers with merchants at the checkout counter. 

Imagine a microchip that you can safely implant under your skin (in the fleshy part of your palm, between the thumb and index finger). Once there, this radio-frequency identification (RFID) chip allows you to initiate in-store payments at a near field communication (NFC) terminal — just as with smart devices and contactless credit cards. 

At the checkout counter, simply wave your wrist/hand across the reader, and money is automatically deducted from your linked credit card or banking account. 

 Learn More About Mobile NFC Payments

Is This Really the Future of In-Store Payments?

Chip-and-skin sounds like it came out of a futuristic sci-fi novel. But if you have a cat or dog, there’s a good chance your pet has already been implanted with a similar type of chip technology (albeit without any type of payment function). 

So, the concept isn’t really that new. But at first glance, it definitely seems bizarre. After all, do you know anyone who wants a microchip under their skin? 

When it comes to implementation and adoption, here are some other obvious questions that come to mind: 

  • Is implanting these chips safe?
  • Do they make you trackable?
  • Can they be removed?
  • Can these chips be hacked? 

Since these microchips are the size of a rice grain, they’re relatively safe to implant and easy to remove. When it comes to security, NFC technology is incredibly robust — but no payment option is 100 percent immune to attack. Not even Bitcoin. 

Tracking is a little harder to lock down. According to some pioneers behind this emerging payment technology, these microchips have no internal power supply. This means they aren’t able to transmit information unless they’re paired with a nearby NFC reader. 

Critics are right to bring attention to potential ethical, privacy and security issues. Then again, supporters of chip-based payments are quick to point out that those who use mobile devices are already being tracked. In fact, smartphones are designed to know your location and monitor your behavior. 

We all kind of accept that. 

Desktop browsers aren’t much better when it comes to privacy. Just ask Facebook and Cambridge Analytica. 

Implanting a chip under the skin may seem like a bizarre strategy, but one could argue this isn’t much different from the payment technologies we currently use. The question is, will people actually use these chip implants? Turns out the answer is yes. 

Chip & Skin Pilot Projects Are Already Underway

Epicenter is an IT startup based in Stockholm, Sweden. It recently received a lot of attention after introducing a voluntary chip program for its staff. Three Square Market (in Wisconsin) launched a similar initiative shortly thereafter. 

At both companies, employee buy-in was surprisingly high. At Three Square Market, for example, nearly 60 percent of the workforce agreed to have microchips implanted under their skin. 

Admittedly, the applications were quite limited. Employees could use their implants to: 

  • Sign in and out of work
  • Pay for food in the cafeteria
  • Manage inventory and delivery 

None of these activities are of much use to hackers. The real test comes when chip manufacturers move beyond the prototype phase and go after the global market — with true payment functionality. No one knows for sure how that will pan out. 

After all, mag-swipe credit cards were safe … until they weren’t. What’s to become of these implanted chips if criminals figure out a way to circumvent their underlying security features? 

Moreover, who pays for the implants (and removal)? Epicenter and Three Square Market footed the bill for their employees, but it’s hard to imagine real shoppers paying $150 a pop when they can get credit cards in the mail for free. 

Even now, execution isn’t 100 percent flawless. Employees at Epicenter and Three Square Market often complain that positioning your hand over the NFC reader is a bit hit-and-miss. Long story short, there are a lot of bugs to work out — but the potential is clearly there. 

Should You Embrace Chip-and-Skin Payments? 

As a consumer, it probably makes sense to sit out for a while. Even if you’re keen on having microchips implanted under your skin, you should wait until the technology has fully matured. 

As a merchant, your job is a little easier. These microchips use the same technology of modern NFC terminals, so if you’re already set up for contactless payments, then you’re already set up for chip-and-skin transactions. 

If you don’t have an NFC reader, however, we’re here to help. Simply schedule a free consultation with our payment services team today, and we’ll walk you through the entire setup process from start to finish.

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Topics: Payment Trends, PCI Compliance and Fraud Prevention, Mobile Payments, EMV, Payment Technology

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