Reasons to be Unafraid of Contactless Payments
An application of the contactless microchip technology, contactless payments are super-fast, extremely simple and very secure. On the rise, contactless payments can be made on a host of devices including but not limited to smartphones, smart watches, key fobs, wristbands, etc.
The latest technology hit in the payment and finance spectrum, the contactless payment technology, is the use of a safe microchip, internal memory, and antenna embedded card that is used to make non-cash payments of small amounts in a way that requires no physical connection between the point of sale (POS) terminal and a payment device. The contactless payment card communicates with its reader via radio frequencies, eliminating the need for physical contact entirely.
How do Contactless Payments Work
A transaction begins when a consumer brings their payment device (payment card, mobile device or smart watch, etc.) within the readable range of the POS terminal. The terminal then proceeds to read automatically the information stored on the memory chip embedded within the card. Once it’s read and gained the information needed, by emitting high-frequency radio waves between the two terminals, the payment transaction is processed. The time for this entire procedure to take place is, give or take a few seconds; faster than any other payment transaction ever made.
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Gaining momentum, and dispelling all contactless payment security concerns, this technology actually allows extremely secure transactions to be completed without compromising personal cardholder information. The technology is changing the face of smart chip card as it is readily being leveraged by government and private corporations to increase speed, security, and suitability.
Mobile Payment Devices
Contactless Payment is used via multiple applications through multiple devices. The variety of options available for contactless payments are increasingly beneficial for industries which are dependent on the convenience of and speed of payment methods such as convenience stores, transit services, and gas stations, entertainment venues, vending areas or quick-serve restaurants or eateries.
The technology for secure payments via smartphones has existed for over a decade, however, in- store payments were minimal until a few years ago. Smartphones these days use NFC or Near Field Communications to make contactless payments. Short range wireless communications services which make use of short-range radio frequency, in NFC transfer both the payment station and NFC-equipped smartphone have embedded within a wire chip. When brought into contact both the payment reader and the phone create a magnetic field allowing electric currents to transfer data between the devices. Highly secure payments method, NFC connectivity, allows the setup of added security measures as it offers a two-way communication path, unlike the similar RFID communication.
Bluetooth Low Energy or BLE beacons, on the other hand, are low cost, minimally powered transmitters that help deliver proximity based signals to devices. Much like NFC, it is also a short-range wireless data transfer technology. However, the range of transmission for a BLE-powered beacon is much longer as compared to an NFC device. BLE data transfer is generally preferred for relying upon position information onto a device and its surroundings.
Apple’s iBeacon and PayPal’s Beacon are two services which make use of the BLE data transfer technology for contactless payments. BLE transactions provide the freedom of payment that NFC controlled devices do not. BLE technology allows a connection to be made virtually anywhere in a store. However, NFC payment solutions provide better security and accurate signaling.
While most current Android and iPhone phones support NFC contactless payments such as iPhone 6, iPhone 6+, and Samsung Galaxy S6 via Android or Samsung Pay, Android phones currently lack the proper BLE support needed for BLE data transfers. All iPhones, however, with iOS 7.1, such as iPhone 6 and iPhone 6+ are equipped to operate the iBeacon, BLE using technology.
Much like secure payments via smartphones, contactless payment using wearable technology has been gaining traction for the past few years. Apple Watch, Samsung Gear S2, Sony Wena are some of the smart watches available in the industry that allows for secure contactless payment transactions. The Apple Watch using the Apple Pay is a portable payment device that can easily link to credit as well as debit cards to make secure payments.
Samsung Gear S2 is the smart watch that is all the platform for Samsung Pay. Sony Wena is the successful outcome of a crowd funded campaign that runs compatible to FeliCa, Japan’s contactless payment system.
Wristbands and More
Apart from smartphone or watches, a new host of technology is on the rise for secure contactless payments. From rings to bracelets, wristbands, and even payment stickers, everything imaginable and more is being used in tandem with the contactless technology.
Barclaycard introduced bPay chipped stickers are a solution for people unwilling to spend significant amounts on the latest iPhone or Apple Watch.
Health bracelets such as the Jawbone UP4 have introduced contactless payment capabilities. bPay bands developed and introduced by Barclay are also a wristband option for those inclined.
Taking things a step further to ensure secure transactions and minimize contactless payment risks, if any, is the Nymi band that boasts a heart rate monitor as a means of security verification during the payment process.
How are Contactless Payments Secure?
One of the major points of concern for contactless payments is the security or lack thereof. A common misconception that they leave a user especially vulnerable to criminal attacks, it is important to note that contactless payments are completely secure, affording far advanced security measures than the traditional credit or debit cards.
Along with the current layers of protection in place by the financial industry such as online authorization or fraud detection services, contactless payments have added technology that boosts the security of the payment method. Contactless payment methods include individual built-In identifiable keys for unique verification of each transaction. It also comes inclusive of the ability to detect and subsequently reject attempts to use the same information multiple times. Moreover, contactless payments keep the cardholder details safe and secure by processing transactions without requiring the account details but instead using alternate methods.
Host Card Emulation technology is used for Android devices to secure NFC payments which disallow transaction information to be stored on any phone/watch hardware. Tokenization, used in transactions made via Apple Pay, Samsung or Android pay is also another method to secure contactless payments. It alleviates any contactless payment security concerns by offering a replacement for the primary account number of any card with a single use pseudo primary account number.
What’s more, biometric identification methods employed by contactless payment options such as Apple and Samsung Pay allow for an even secure transaction. Fingerprint authentication combined with Tokenization renders fraudulent activity virtually impossible during a contactless payment.
The Bottom Line
Moving towards the era of completely digitized financial transactions, it comes as no surprise that the industry big guns are continuously working to improve the contactless payment experience for the consumer. From MasterCard testing out facial recognition as a means of authentication to Google developing a Hands-Free technology to make payment transactions hands-free, contactless payments are the way of the future. Like it or not, but it sure seems like this innovation is here to stay.