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The emergence of payment systems as a product of technology revolutions

payment methods

Technology is rapidly changing our lives and the way we do business. Since a long time ago, various forms of payments have been adopted where precious metals such as gold and other valuables were used to make different payments.

Different nations used different methods as legal tenders as payment methods.

In the twenty first century, all of the above mentioned methods have been abandoned and new payment methods have emerged. The emerging payment methods are characterized by the wide spread of technological advancements. Various payment systems and cards were introduced to provide the user with a unique and enjoyable customer experience.

Rapid technological advances are introducing new business propositions and models. Digital currencies, peer-to-peer lending, mobile payments, crowd funding are some of those advances.

As a result, a lot of data has been provided to the service/product provider which will give the latter the option to customize the offering of their products and/or services to suit customers’ needs.

These innovations enable additional cash flow management, automated and complex transactions’ payment and settlement, increase of consumption, and the support of newly introduced currencies (such as bitcoin and Ripple) and payment platforms.

In addition, there is a Distributed ledger technology (DLT) I which is disrupting the payment systems industry. DLT is defined as a database that depends on computers, which is shared and synchronized across multiple locations, institutions, and geographies.

Some countries are widely adapting mobile payments in efforts to support cashless economies (such as India and Kenya).

Moreover, advancements in semiconductor is one of the advancements in technology that took place. A computing power that needed big rooms can now fit in a very small structure.

One of the technologies that took advantage of these advancements is Smart Card. Smartcards have changed the way transactions are conducted with an added advantage of identification and authorization.

Banks and retail stores are increasingly offering their services and products electronically and in online forms. This increased customer’s dependency on electronic and online payment methods using their mobile phones, smart cards among others.

Software development companies can take advantage of these advancements and offer services and products that will help to effectively and efficiently conduct transactions.

A smart card is a small card with an embedded computer chip. The chip can be either a microprocessor with internal memory or a non-programmable memory chip.

There are different features of smart cards:

  • They can be programmed, to read, store, process and send data.
  • They can perform complex cryptographic algorithms.
  • They can offer a tamper-resistant storage.
  • They can support complex computations that can be done on the card itself which helps in securing data.
  • They can be customized to meet the customer’s need.
  • They come with an operating system known as a chip operating system.
  • It is the operating system that determines the functionality of the cards (which is highly customizable).

The customizable functions of the OS can:

  • manage the data between the chip and the outside entities.
  • manage data and files.
  • provide data and card access control and security.

To mention a few, smart cards can be used as payment, identification (government, schools etc.), medical cards (for storing and processing patients’ medical record), and transport cards among others.

Such applications can be programmed on the chip of the card. Java Card Technology is one of the technologies that can be used to implement and deploy applications on smart card using Java programming Language.

Java Card Technology allows the programmer to take advantage of Java’s security, object-oriented nature. The developer can write smart card applications using standard Java card API.

Java developer will find out that there is difference between developing a usual java application and a smart card application. The difference is that smart card applications are being developed using applets. The developers should also take advantage of APDU protocol to use them in the smart card applications.

After developing the smart card application, the developer has to integrate it with Visa Open Platform framework.

Finally, as a result of technology advancements, innovative products and solutions are being regularly introduced to enhance payment process around the world. These solutions are becoming more efficient, more affordable and more user friendly. As a result, it is facilitating the way business is done which boosts productivity.

Read next: How fintech has reshaped the business lending process

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