Are Contactless Payments Safe?

as businesses and consumers continue to shift towards more efficient and convenient modes of transactions.

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However, this rising adoption also raises concerns about safety and security that could accompany the use of contactless payment technology.

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One specific type of contactless payment gathering momentum is the tap to pay functionality, which streamlines transactions while enhancing security measures.

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This article aims to demystify the safety aspects of this new payment mode. We will cover the different types of contactless payment solutions, ranging from QR codes to digital wallets and contactless cards.

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As we take a look at the inner workings of tap to pay systems, we will focus on their security features, in order to empower businesses and consumers to make informed decisions regarding their preferred payment methods.

'Tap to Pay' is a contactless payment method that has recently gained momentum in the digital payment landscape due to its remarkable efficiency and convenience. Also known as near field communication (NFC) payment, 'tap to pay' enables you to make transactions simply by tapping or hovering your card or digital wallet-equipped device over a compatible payment terminal or other mobile device.

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This payment method employs radio-frequency identification (RFID) or NFC technology, where the card or device communicates wirelessly with the mobile device, instantaneously transferring the necessary data to execute the transaction.

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Unlike the traditional method of swiping or inserting cards into a reader, 'tap to pay' significantly accelerates the payment process, thereby reducing queue times and enhancing the overall customer experience.

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Moreover, as the name suggests, 'tap to pay' doesn't require physical contact with the terminal. This not only reduces wear and tear on the card but also provides the added benefit of hygiene—a feature highly appreciated in a post-pandemic world.

Contactless payment solutions have risen to prominence in recent years as technology continues to permanently transform financial transactions. These payment methods shun physical contact with payment machines, making them fast, easy, and hygienic. Here are several popular varieties:

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QR codes: Quick Response codes have seen significant growth in use and originally simply led to their online payment portal. Now though with particular SoftPOS apps customers can scan the QR code with their mobile devices, and complete the payment in app at checkout. This process conveniently merges physical and digital shopping experiences.

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Digital wallets: These are apps where users securely store their various payment information, from credit and debit cards to bank accounts. To pay, customers simply select the intended payment option within the digital wallet and authorize the transaction, all within the safety of their mobile device. This solution is called Tap to Pay on iPhone and Android.

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Contactless credit cards: Both credit and debit cards are enabled with NFC technology via embedded chips for contactless use. Customers simply hold their card near a compatible payment terminal to process the transaction, without the need to swipe or insert the card.

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These advances in payment technology make transactions seamless, cashless, and contactless, thereby offering customers a convenient and efficient way to pay.

Despite the benefits of contactless/tap to pay payments, it also comes with several potential risks:

Loss or theft

If your contactless card is lost or stolen, it could be used for unauthorized transactions. Although most cards restrict purchase amounts per transaction and per day, money could be lost until the issue is discovered and the card is blocked or reported.

Transaction errors

As tap to pay/ contactless is designed for quick transactions, there is a risk of making accidental payments if you unknowingly tap or hover your card or device near the reader. Additionally, unintended dual payments could occur if you have multiple contactless cards close together when tapping.

Security issues

Although the information sent contactlessly is encrypted, there’s a potential, albeit minute, risk of interception by technologically equipped criminals. Unauthorized reading devices can potentially 'skim' data from contactless cards, although the implementation of tokenization with Tap to Pay on iPhone and Android has significantly reduced this vulnerability.

Privacy concerns

As with any digital transaction, there may be concerns about data privacy. When the transaction is completed, data about your purchase, such as the location, time, and amount of purchase, is stored and can potentially be accessed by the payment processor and financial institutions.

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To mitigate these risks, regular monitoring of banking and card accounts, ensuring the safety of your cards and devices, and using secure and trusted payment processors are wise steps to take. This way, you can enjoy the convenience of tap to pay while staying secure. Also with tokenisation, data is held in Token Vaults thereby safeguarding the hacking of sensitive information.

Despite the various safety measures inherent in contactless/tap to pay systems, there are additional steps businesses can take to further secure their systems and protect consumers.

Perform regular updates

Payment systems, like any other software, need to be regularly updated. Businesses should ensure their payment systems software and POS terminals are updated with the latest versions. This helps to reduce vulnerabilities, as most updates contain security improvements to counter new threats.

Use encryption

Businesses should enforce stringent encryption policies. The use of tokenization and two-factor authentication should be commonplace. Strong encryption acts as a deterrent to potential threats and helps in securing sensitive information during transactions.

Educate your customers

In many cases, security breaches occur due to the end-user's lack of knowledge. Therefore, it is essential that businesses take the time to educate their customers on secure payment practices. This could include advising customers not to share their cards or devices with others, regularly checking their bank statements for any anomalies, and promptly reporting if their card is lost or stolen.

Implement advanced security protocols

Businesses can employ advanced security protocols like EMV Tokenisation (Europay, MasterCard, and Visa) standards, which make transactions far more secure. EMV cards are embedded with a microprocessor chip that adds an extra layer of security, making them more difficult to clone or counterfeit compared to magnetic stripe cards.

Ensure your tap and pay/contactless system is compliant with government regulations

Adhering to necessary payment card industry data security standard (PCI DSS) compliance not only ensures that a company meets the basic security requirements but also boosts consumer confidence in the business's commitment to keeping their data secure.

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By prioritizing the security of tap to pay systems, businesses can inspire confidence and trust among their consumers, fostering a safe and nurturing business environment.