What is Contactless Payment?
Contactless payment refers to a secure way for customers to purchase products or services using debit, credit, smart card, radio frequency identification technology, and near-field communication.
Know how Contactless Payment Work
When the merchant’s system asks customers to pay, they bring the card near the contactless payment icon on the terminal. Information from the card to the chip in the bank is used electronically. When the system accepts the tap, it shows the customer a beep, green light, or checkmark. Once approved, the transaction will be completed.
With the rise of wireless technology and the popularity of smart devices, consumers can also connect with their credit card devices – smartphones, smartwatches, or fitness trackers – to make payments through a contactless system. This is done by downloading payment apps like Phone Pay, Paytm, Apple Pay, Google Pay, and Samsung Pay which allows customers to securely purchase credit or debit card information by tapping their smartphone.
In most cases, the transaction size on the card is limited for non-contact payments. The amount acceptable for contactless transactions varies by country and bank. Some merchants and retailers may set lower limits for the next tap system to prevent fraud, while others still allow larger transactions. Signatures may be required before a large number of transactions can be approved.
Advantages and disadvantages of contactless payments
Fraudsters can steal and clone information from the magnetic stripes on the back of payment cards. This allows them to clone information and create new cards, which will lead to fraud and identity theft. Contactless payments reduce the risk for both consumers and merchants. This is because they are safer than using magnetic stripes on the back of a payment card. The information submitted by the merchant terminal via contactless payment is encrypted, which means it is difficult to intercept and steal.
Despite these security features, criminals are still able to skim cards in a customer’s wallet using a smartphone to read. The range of cards on which the card can be read is too small and even if the thief is close enough to catch the data, they cannot make a copy of the card. This is not true of cards with magnetic stripes. That said, chip and PIN cards are still the most secure, as they cannot be duplicated and require data that is nowhere else on the card.
Customers are now able to dispute fraudulent transactions and obtain replacement cards. There are also protective card sleeves and wallets that prevent readers from taking the data on your card in the first place. As of 201, merchants and credit card companies have been held responsible for any fraudulent actions taken by their systems if they do not have chip technology.
Some Examples of contactless payments
1. Apple pay
It allows users to store credit and debit card information on their devices to make store purchases. The system also allows purchases through online and other apps. Users can send money to friends and family through their text messaging system using Apple Pay.
2. Google Pay
Google allows users to pay on Google Brick & Mortar and online vendors securely through the Google Pay app. Instead of using a credit card number, Google shares an encrypted number associated with the user’s payment card with the retailer. Similar to Apple Pal Pay, users can also send and receive money using an email address or phone number.
3. Samsung Pay
Samsung has also launched a digital wallet, allowing users to access their payment card information on the app at merchant terminals. Samsung Pay users can also earn cashback and other rewards using their phones to make purchases. Users simply take a photo of their card or barcode and tap to check.