Contactless payment is a trend to watch. Contactless payment solutions made via a mobile device have the potential to simplify and expedite business dealings greatly.
EMV payments, similar to contactless payments, are significantly more secure than payments made with magnetic-stripe cards. Magnetic stripe cards have been around since the 1960s, making them hopelessly out of date. A magstripe card’s related bank account information is fixed (printed on the stripe). Criminals can easily steal and clone your information if they get their hands on your card (and go on a shopping spree).
Not so much when making a contactless payment. Learn more about the benefits and safety of contactless payments below.
Quick overview of the development of contactless payment systems
NFC is a form of RFID technology that enables us to identify objects via radio waves. RFID has been around for a while, having been used for marking cattle and scanning groceries for decades now. To facilitate contactless mobile payments, it is currently widely used (and also in video game technology).
Concept of Contactless Payment Solution?
Contactless payment solutions do not require the customer to touch the card reader or terminal physically.
Many people, including company owners, believe switching to contactless payments will save them time and effort. Mastercard conducted a global consumer study in April 2020. They concluded that contactless payments are up to ten times faster than conventional in-person payment options, and 82% of the 17,000 people polled also considered them cleaner.
How Many Distinct Payment Methods Do Contactless Systems Support?
In today’s market, contactless payments often fall into one of three types:
- Charge-free plastic cards.
- Contactless mobile payments.
- Code-based currency exchange.
While in-store purchases are the primary focus of most discussions about contactless payment solutions, there are alternative methods, such as ordering online or over the phone, that are also contactless.
What is a Contactless Credit Card?
If you have a contactless payment card, you can purchase without touching the terminal thanks to the “tap to pay” system. To use this payment method, the store’s POS terminal and the customer’s credit card must support near-field communication (NFC) technology. An antenna sign of four curved lines will appear on the front or back of contactless payment cards.
To pay, the customer taps their card on the terminal. The tokenization and encryption of card data during transmission ensure its safety. In other words, it’s just as safe as swiping or entering the card into the terminal for these purchases.
Contactless payment cards are more convenient than traditional card transactions; however, they may soon be outsold by other payment methods.
Where does the safety of contactless payments come from?
It’s unlikely that someone will be able to steal information from your contactless payment card simply by standing nearby.
The card must be within one or two centimetres of the terminal to be read. Once the chip is within range of the terminal, the terminal’s power “wakes up” the chip, activating it and causing it to begin transmitting data. A unique code for each transaction provides an additional layer of protection.
Aside from that, it takes a point-of-sale device to intercept and decipher data from a contactless payment card or mobile device. In addition, multi-factor authentication is available on many mobile devices, adding another layer of protection against unauthorized access to a digital wallet.
Contactless payment solutions are likely to remain popular even after the pandemic has ended. Visa found that nearly two-thirds of its 2021 Back to Business Study respondents anticipated using contactless payment options as frequently, if not more frequently than they do currently. They are afforded a plethora of options, which is a positive development.
Conclusion
Both consumers and retailers are rapidly adopting contactless cards because of the convenience they provide for making everyday purchases. Your payment options at the register include swiping your credit card or mobile device.
To what extent should we forego the use of conventional payment methods like Chip and PIN in favor of contactless alternatives? If so, what do we need to know before engaging in a financial transaction employing such choices?
