Advantages:
1.
Better security: It’s far more secure than mag stripe
data. Messages are single use, so reading them is useless. Skimming
is virtually impossible. Without a PIN, a stolen physical card can be used, so
it’s less secure than chip-and-pin, but mostly because of the pin.
2.
Variety of form factors: Mag stripe is very specifically designed
to be on a card, and it’s yet to be seen whether EMV will make its way to other
form factors (I’m guessing no). Contactless is found on cards, key fobs,
smartphones, vehicles, or virtually anything that can be transported with a
person.
3.
Convenience. Tapping to pay is faster and more convenient
than most other forms of payment. A contactless card, for instance, can
be used without removing it from your wallet. Contactless in transit
venues allows lines of people to flow quickly through turnstyles. The
multiple form factors also offers more convenience. My car can
automatically pay-at-the-pump with Speedpass. I can buy my groceries with
my phone. To my experience, only proximity (iBeacon, Bluetooth Low
Energy) and contextual payment systems (like Pay With Square) can meet or
exceed the convenience.
4.
More features. When specifically tied to a smart phone, such
as Google Wallet, many features are now available that are impossible for a
mag-stripe card or even EMV. Payment history, virtual card provisioning
(safer), remote deactivation, and user-configured pin-protection are just a few
of the features. The sky is the limit here.
5.
Opportunities for innovation. Primarily due to their
viability on smart phones, contactless payments provide a platform for
innovation. In the past 60 years since its invention, what innovation
have we seen on the mag-stripe? Very little (queue the hate mail from the
one person with a patent on magstripe oxidation and embossing processes). We’ve
seen quite a bit with contactless in a much shorter time, and continue to see
it today. I expect this trend to continue.
Disadvantages:
1.
Acceptance. Contactless cards are accepted at far fewer
locations than mag-stripe. Consumers cannot leave home with only their
NFC-capable phone, because they will inevitably need a mag stripe to pay.
2.
Less implicit. If you have multiple cards in your wallet and
you pay without removing them, the winner is random luck. Sometimes, this
can cause real issues (such as errors at transit settings). Personally, I
think this is just a “feature reality” but I have heard some complaints about
it.
3.
Less secure than chip-and-pin. When you introduce a pin to
EMV, using a stolen card in brick-and-mortar is almost impossible.
Contactless could also use a pin (and often does for high-value transactions),
but then you lose much of the convenience of contactless payments.
Source : Dan
Martin, Community Manager, MasterCard Developer Zone
