Every new technology has to overcome past practice.
When electronic payments started, people found comfort in handing over a card as if it were a bank note. Signing for a credit card payment is like signing a cheque and typing in your PIN is the electronic version of a signature.
So of course, contactless payments seemed scary at first and predictably, people were worried about security.
But counterintuitive as it may seem, contactless payments offer more security benefits over traditional methods.
1. The card never leaves the payer’s hands so there’s less chance of leaving it behind, or someone to secretly copy the card information.
2. Contactless readers use chip cards, but with technology to read the card at a distance of about 40mm, rather than the card having to be inserted in the card reader. The security characteristics remain exactly the same.
3. Because the transaction must be prepared by the merchant and can only be registered once, there’s no chance to pay by accident. If the reader discovers a number of cards, it will either follow a hierarchy and only respond to the designated card, or it will flag to users that there are too many cards within range.
4. If the transaction is for more than $80, the user will be asked to either sign or enter a PIN, exactly as for magnetic stripe or ordinary chip transactions.
5. The biggest risk with contactless cards is that the car itself can be stolen, and a fraudster can potentially make one or more transactions of less than $80. While this is not ideal, the risk to the card owner is usually minimal, as most major card issuers automatically provide zero liability insurance to protect their account holders.
With this security in place and the outstanding convenience it offers, it is no wonder that three in four Kiwis have taken to contactless payments already. For merchants, too, accepting contactless payments is fast becoming a facility their customers expect – a prerequisite for doing good business.