FEATURE Contactless Payments


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One of the many concerns that has arisen out of the COVID-19 pandemic is the ability for both businesses and consumers to conduct safe transactions at the grocery store, gas station, restau- rants and other merchants. As financial institutions, your credit and debit card offerings are a key component to limiting physical contact between customers and merchant terminals, or between customers and retail employees. Your card portfolio already includes EMV chip cards that add


security and remove liability for consumers and business. With contactless payment capabilities, your debit and credit card programs will make it even safer for cardholders to use their card wherever and whenever they shop.


What are contactless payments?


At a basic level, contactless payments describe a way to conduct transactions that don’t require inserting chip cards into an EMV reader or swiping a card at a merchant’s point-of-sale(POS) termi- nal. Contactless payments can function in one of two ways; cards can be used as “tap-and-go” products or as part of a consumer’s overall digital wallet. Contactless payments—both tap-and-go as well as digital/mobile wallets—can often work faster than tradi- tional EMV chip reader payments because of the near-field com- munication (NFC) techniques they use. In fact, EMV transactions take around 30 seconds. A contactless payment can take anywhere from 13 to 15 seconds or less. For your busiest cardholders, that time saved can be a real lifeline.


How do NFC payments work?


NFC payments involve the chip and an antenna inside the card that sends a token to the card reader via radio waves. This token, a random set of numbers and symbols, is distinct and recorded for individual transactions. Even if a criminal steals the transaction data, they can’t use it to reverse engineer a full card number.


Tap-and-go payments


Tap-and-go payments, in many cases, can eliminate the need for signing for purchases as the card sends the necessary information via radio signals. As a customer places their card mere centime- ters from the card reader, the information passes through and the transaction processes. Of course, offering your cardholders the convenience of tap-and-go payments is dependent upon the presence of what’s called a “dual interface” chip, which is capable of both processing EMV transactions and contactless payments. One major question consumers seem to have about tap-and-go


payments is the safety and security of the model. Because the data from the card is uniquely tied to the transaction in question, a hacker or data thief who intercepts this information is highly unlikely to back trace that information.


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Another concern raised by some concerned shoppers is the


viability of using an RFID-blocking wallet to protect cardholders from thieves who try to steal card information by passing by users of contactless cards. By and large, these concerns are largely unfounded. Cybersecurity experts recommend your cardholders save their money—NFC-aware cards are generally protected from this sort of fraud. One major benefit of adding NFC-aware cards to your portfolio?


It’s a forward-thinking investment. Tap-and-go payment methods will only become more popular as more customers become aware of just how much faster NFC payments can be. Even if your financial institution recently converted all cardholders’ cards to EMV-capable ones, it’s worth rolling out a new program to take advantage of advancements in this technology. In addition to the competitive advantage you’ll have over financial brands that haven’t chosen NFC-capable cards, you can tout the consumer- friendly and safety-minded benefits of these cards.


The impact of COVID-19 on contactless payments


As the COVID-19 pandemic has shown, consumers in the United States who initially exhibited hesitation regarding contactless payment are now embracing the practice. A recent survey from Mastercard, for example, suggests that nearly one-third of U.S. consumers are using contactless cards more than other modes of payment. Mobile wallet use and contactless payments will only continue


to increase in the United States as a result of COVID-19, which is why it’s definitely a viable alternative to both traditional EMV chip card use or tap-and-go payments. Even if your customers aren’t using it today, that’s not to say they won’t want to in the future.


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