Guide to contactless credit cards
Since their introduction in the 1950s, credit cards have proved to be a straightforward and popular method for paying, with more people now choosing to pay with plastic than with cash. The ways you can use your card to pay for products using a credit card has changed dramatically over these years, from signing your name, to magnetic strip swiping, to chip and pin. The latest innovative technology (though by no means the last), is contactless payments.
Contactless technology (also known as near-field communications or NFC) allows cardholders to make small payments of less than £30, without the need to place the card in the reader and enter the PIN. Instead, users tap the card over the reader, and the payment is automatically authorised.
As of 2017, there are more than 108 million contactless cards in issue in the UK (including both debit and credit cards), and as people take advantage of their speed and convenience, their use is growing rapidly year on year. With public transport providers (e.g. TFL - Transport for London) embracing the new technology, the numbers of contactless transactions look set to soar even further.
How does contactless technology work?
Not all debit and credit cards offer contactless payments. To be contactless ready, cards must have a built-in chip and radio frequency antenna. This chip emits a radio wave response when the card is held near a contactless payment reader to facilitate the processing of the transaction. Contactless card chips are separate and distinct from the visible EMV chips visibly embedded within cards.
To check whether your debit or credit card is contactless, look for this symbol, which is not too dissimilar to the Wi-Fi logo. Retailers who accept contactless payments will also display this logo on their payment terminal.
To make a payment using a contactless card, once the retailer has inputted the amount of the sale into the card reader, you will either be passed the reader, or be asked to tap the reader with your card to make the payment. Either way, it is always advisable to check the amount of the transaction before committing to the sale. Simply tap and hold your card near the reader, until you hear a beep – this is the sound of the transaction being completed. You will be provided with a receipt for your purchase as usual.
MasterCard and Visa have their own contactless payment systems; PayPass and PayWave respectively, but they work in the same way.
If you do not want a contactless card, many banks offer an ‘op-out’, where they will send you an ordinary chip and pin card instead.
What are the benefits?
There are a number of advantages to paying with contactless debit and credit cards, but the most obvious is the convenience. Some of the chip & PIN readers are slow to process transactions, whereas a contactless payment takes just one or two seconds to complete.
The speed at which contactless transactions are made means that it is quicker for customers to pay, which in turn reduces checkout queues in shops up and down the country. This is probably most appreciated on the London underground during peak times.
There are a number of security benefits with contactless cards, such as the card never has to leave the users hand, therefore lessening the chance of ‘skimming’ (passing your card through an illegal card reader, which copies and stores your details), and with the PIN not necessary for smaller purchases, there is less risk that fraudsters can discover users’ PINs.
How safe are contactless payments?
It has been reported by Financial Fraud Action UK that fraudulent use of contactless cards and mobile payments is on the increase (up to £7m in 2016, from £4.2m in 2015). However, the amount of money spent using contactless technology has also increased significantly from £7.75bn to £25.2bn in those years, therefore it would seem that in context and by comparison, contactless fraud is actually on the decrease per pound transacted. That said, there are certainly some security concerns which cardholders should be aware of, and certain safeguards they can put in place to ensure that they are not a victim of this fraud:
Losing your card - Because you do not need to enter a PIN or have any other form of ID when shopping with a contactless credit card, if you lose it or it is stolen, it can be used fraudulently by someone else. However, there are some safeguards against this, notably that users will be asked to enter their PIN at random during a transaction. Being asked for your PIN is more likely if you make several transactions one after another. While there is no way at present to stop someone from using your card contactlessly if they find it or indeed steal it, if you do take a contactless card out with you, look after it and check it often. If you notice it is missing, contact your bank without delay.
Being charged for something you did not purchase - Another concern regarding the security of contactless card is that cardholders can accidentally pay for someone else’s transaction, or for items without intending to. However, the technology requires that the card is held within 20cm of the reader, and must be held steady for one or two seconds for the transaction to be processed. The card terminal is also programmed to reject the transaction if there is more than one contactless card within range. Both of these security features mean that it is unlikely that the card will be charged inadvertently.
Having your card details taken by fraudsters without knowing it – Wherever there is new technology, fraudsters are rarely far behind, and this is no different with contactless cards. Illegal hand-held card readers can copy the details of a card within a certain distance, which are then in turn used fraudulently. One way to combat this is to purchase a dedicated RFID (radio-frequency identification) wallet, purse, or card holder, which are impervious to any external reader. If the cost of this is too much for you to bear, you can purchase a relatively inexpensive RFID sleeve for your contactless card, or you could even line your wallet or purse in tin foil.
The good news – Whatever your worry or concern, contactless fraud is treated by credit card providers exactly the same as standard credit cards, in that if a card has been copied, lost or stolen, the card provider will refund the money in full, provided that the cardholder wasn’t negligent and the card was reported missing to them immediately. Furthermore, with credit card providers paying out for fraudulent transactions, you can bet your bottom dollar (or pound) that they are constantly investing in and developing new technologies to keep one step ahead of the fraudsters.