Contactless payment: Tap your card and go

My bank sent an email a week ago urging anyone who still signs for their credit card purchases to be PIN ready by August 1 2014. That got me thinking: Not only can’t I remember when was the last time I signed a card receipt but, as it is, I hardly ever use my PIN. Most of my purchases are paid for with a card tap.

What is contactless payment?

This feature is a fast hassle-free payment method that requires a tap of a card on an enabled point of sale terminal reader. You no longer need to physically swipe or insert your card, sign a receipt, enter your PIN or even hand over your card to the cashier.

Forgot your wallet? No worries! All you’ll need is your mobile or your keys

More than just cards

While widely used in credit and debit cards, there are more options to contactless payments. These include NFC enabled phones provisioned with a payment app and account information, stickers or tags fixed to the back of handsets or mobile devices and key fobs attached to house or car keys. The payment and settlement processes are the same as those used when paying with a traditional card.

How does it work?

Near Field Communications (NFC) is a short-range, low power wireless link that transfers small amounts of data between two devices located a few centimeters apart from each other. This is why, even when the term normally used is “tapping”, simply waving your card in front of the reader also works. An active or initiator device, in this case the merchant’s contactless payment-capable POS system, generates a radio field that can power a passive target. This allows tags, stickers, fobs or cards, which don’t have batteries, to be accessed by an NFC reader.

How safe are contactless payments?

Contactless runs on the same network as normal magnetic strip and chip transactions. Data protection and transaction security is preserved by encryption technologies.

Security features include:

  • Ultra short read range – Generally less than 4 cm
  • Unique codes for every transaction and secure authorisation processes - If anyone attempts to use intercepted data to manufacture a counterfeit card, the transaction will be identified and prevented.
  • You remain in control of your cards at all times during the transaction – There is no need for you to hand over your card or device which reduces the risk of fraud. Also, most transactions are protected by the same fraud guarantee as standard purchases.
  • Purchase limit – Usually $100 before the terminal requires a PIN or signature.
  • No double tapping or accidental payments - As each transaction is unique, only one payment can be made per purchase. Even if you tap multiple times, you’ll only get billed once.

This payment method, as convenient as it is, does have one flaw: If the credit card, mobile device or fob is stolen or used fraudulently by the finder if lost, anyone can make small purchases with your card without the need for authentication. While the charges are likely waived by the financial institution, there is still an opportunity for financial fraud.

How do you feel about contactless payments?

As a devoted online shopper, self-checkout embracer and an online product review supporter, I believe contactless payments just furthers the changes to our shopping experience in a positive way, but not everyone agrees with me. What’s your take on contactless payments?

Enjoyed this post? Please share it or leave a comment below. Then never miss another piece, subscribe to our newsletter or read us via RSS to have everything delivered to you. Yay!

Written by

Analytical by nature, Mora is always on the lookout for new tech trends and releases. Bridging the gap between IT and businesses is how this avid reader enjoys the best of both worlds. Her curiosity and dedication have earned her the EmpireOne's Business Systems Analyst role.