The term”contactless” refers to a safe method to allow consumers to purchase goods or services with credit or debit cards smartcard or another payment device using RFID (RFID) technology and near-field communications (NFC). The payment method is accomplished by tapping a credit or debit card or another device at the Point-of-Sale Terminal equipped with technology for payment using contactless. Contactless Payments System are also called tap-and-go or tap by certain retailers and banks.
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How Contactless Payments Work
Contactless payment lets consumers purchase goods and services with their credit or debit cards that use RFID technology — also known in the industry as chips or other payment devices , without the requirement to swipe or enter the private identification code (PIN), and/or make a sign-off for transactions. Merchants that accept contactless payments use terminals at the point of sale that have specific symbols that identify the technology. This symbol is like the WiFi logo, but placed on its reverse. Here’s how it how it works. When the system of the merchant prompts the client to make a payment, they take the card close to the payment symbol that is contactless on the terminal. The information is sent electronically by data from the chip it to the banking institution. If the system is able to accept that tap it alerts the customer via the sound of a beep either a green or red light or a checkmark. After the approval is accepted then it is considered that the process is completed.
With the development of wireless technology as well as the growing popularity of smart devices, people can use the debit or credit card to their smartwatch, smartphone or fitness tracker, to make payments using the contactless system too. It is achieved by downloading a pay application like Apple Pay, allowing consumers to safely store the details of their debit and credit cards for purchases using the screen of a smartphone or an Apple iWatch.In the majority of cases transactions on credit cards are restricted to allow contactless payments. The amount that can be used for a contactless transaction is different according to the country and the bank. Some retailers and merchants have a lower limit set for their tap system to deter fraud however some permit large transactions to go through. Large amounts of money might require an individual signature to be authorized. Advantages and Disadvantages of Contactless Payment
Fraudsters can steal and copy information from magnetic stripes that are on the back of credit cards. They can then clone the information and create new cards, which can lead to fraudulent transactions as well as fraud. Identity theft is a common problem. Contactless payments lower risks to both the risk for both the user as well as the merchant. This is due to the fact that they are more secure than magnets that are on the back of credit cards. The data that’s sent through the terminal of the merchant through contactless payments, on the contrary, is protected and therefore extremely difficult to steal and intercept. Despite these security measures however, criminals still have the ability to steal cards from the wallets of consumers using mobile phones in order to scan. The range of where cards will be read incredibly small and, even if the criminal is close enough to steal information, they aren’t able to create an exact copy or copy of the credit card. This isn’t the case with cards that have magnetic stripes. In the end chips or PIN cards are the most secure because they cannot be duplicated and they require information that isn’t present elsewhere on the card.
Consumers are now able contest fraudulent transactions and obtain replacement cards. There are also security wallets and sleeves for cards that prevent readers from accessing the card data of yours at all. In 2015, credit card companies were responsible for any fraud that was carried out on their systems even in the absence of chip technology installed.
History of Contactless Pay
Contactless payments have been in use since the early 1990s with few retailers and merchants making use of the technology in the time. Since the 1990s, the technology has expanded across hundreds of institutions, credit card companies merchants, as well as retailers across the globe.
South Korea’s transit agency in Seoul has one of the first payment systems that were contactless. In 1995, the system eventually became known as UPass which offered passengers an easy and quick method to pay for bus rides by using an electronic system that is contactless. Mobil offered one of the first contactless payment methods known as Speedpass in 1997, which allowed customers to pay for gasoline by using a specially-designed fob, which was filled with cash at gas stations that are participating. The contactless system gained popularity throughout the United Kingdom after London’s transit agency introduced its prepaid contactless Oyster Card system for commuters to utilize for trains on the Underground. Since 2014, the company began giving commuters the option of utilize contactless credit or debit cards to utilize on the public transport system.
In the U.S. market has been very slow to adopt contactless payments. About 20% of transactions across Australia, Canada, South Korea as well as South Korea, and the United Kingdom are conducted using payments that are not made using contactless in accordance with a 2018 study by consulting company A.T. Kearney. Americans continue to use cash in physical form more frequently than credit cards in the amount of nearly fifty billion transactions every year, which is 26 percent of all payment transactions, as per the report. Due to the number of banks and retailers, it is apparent that the American market is becoming more fragmented.
Examples of Contactless Payment
Contactless payment is offered through banks and financial institutions. Other companies have joined the party and have launched their own forms of contactless payments. For example, Google and Android introduced payment systems that work with their respective devices via NFC in 2011, while Apple joined the party with Apple Pay, its personal version of the electronic wallet in 2014.8
Apple Pay
The majority of Apple devices are already equipped with Apple Wallet app. It lets users save credit and debit card data on their devices, including an iPhone or iWatch — to purchase items in retail stores. It also permits purchases to be made on the internet as well as via other applications. Customers can also send money to their family and friends via text messages through Apple Pay.
Google Pay
Google lets users pay at brick-and-mortar stores and online merchants using secure payment methods using the Google Pay application. Instead of using the credit card number, Google shares an encrypted number linked to the payment card with the merchant. Similar to Apple Pay, users can also transfer money and pay through an email address or a phone number.
Samsung Pay
Samsung has also released the digital wallet, which allows customers to store their credit card details in the app and use it at terminals for merchants. Samsung Pay users can also earn cashback or other rewards using their smartphones to pay for purchases. Customers simply need to take a picture of their card or the barcode, and then tap to pay.