Contactless Payments & Security: What You Need to Know

Security, Mobile Payments, contactless, ccv

Contactless payments are on the rise. Nearly half of all European card transactions (47%) use contactless technology, and in the Netherlands that rises to 51%. A notable exception to the rule is Germany, where even standard card payments are shunned in favour of cash. But even there, change is afoot – with 42% of Germans now viewing contactless payments as more convenient.

It’s clear that the days of rooting in your pocket for change – or even typing in a PIN – are numbered.

So why the meteoric rise of contactless? Customers love the speed and convenience of paying with a simple tap; and retailers appreciate that it cuts down on queues, allowing them to serve more customers faster. Contactless is also increasingly versatile: from digital wallet apps on smartphones, to key fobs, watches, and stickers, payments are no longer the preserve of credit or debit cards.


How contactless technology works

The technology behind contactless card payments is known as Radio Frequency Identification Technology (RFID); and this was later developed into the Near-Field Communication (NFC) technology used by mobile devices. Here’s how it works… Contactless-enabled cards and devices contain a chip that emits radio waves over a short range. These radio waves allow payment information to be transmitted to a payment terminal, when the card or device is held near it.

A common concern with contactless payments is: how secure are they? Merchants want to be sure that they are offering customers a safe payment method, but rumours and myths about contactless security are rife. However, the fact is that contactless payments are extremely secure, and in this article we’re going to tackle the myths that say otherwise.


Security and contactless payments

According to the Swiss Payment Monitor, 15% of consumer respondents to their survey said that security was the most important criteria when choosing a payment method for face-to-face business. That made security the second-highest payment method concern amongst those surveyed, beneath only “no additional costs” (16%).

Let’s be clear: contactless payments are inherently secure, because the payment information sent between device and terminal is encrypted. That is, it’s in the form of a secure code which is extremely difficult for hackers to intercept.

For card payments, there is a set limit to the number of transactions in a day, and the spend per transaction. This varies across Europe, but in general it is between €20-40 per purchase for NFC devices without a PIN.  Thus, if the card is stolen the thief will be restricted in what they can do with it. Similar restrictions on payments from mobile devices are put in place, and these devices are also protected by additional layers of security – such as a PIN or fingerprint scanner.

Nevertheless, myths about the dangers of contactless abound, both online and on the street. Here, we’ll examine four of these common misconceptions:

1. Theft by payment terminal 

Myth:A thief can steal from you by passing a payment terminal near a card or device in your pocket. 

Fact: To get hold of a payment terminal, you must be registered with a terminal provider. Therefore, any illegally obtained payments would be directly traceable back to the thief. They would also have to get very close to you, and the other contents of your wallet or bag would obstruct the payment taking place.

2. Theft by app

Myth: There are mobile apps that use contactless technology to steal your bank details from your card.

Fact: There are apps that can extract very limited information from your card via NFC – that is, only your account number and card expiration date. But, these details can’t be used to steal money from you by themselves. In fact, this information could also be known by a criminal if a physical bank card is stolen.

3. Counterfeiting your card

Myth: During a contactless transaction, a thief can intercept your payment details and create a counterfeit card.

Fact: When you make a contactless payment, your payment details are encrypted: each transaction takes place via a one-off unique number sent between the card/device and the terminal. This is extremely difficult for any potential hacker to decode. And it’s also very unlikely that they’ll try!

4. Stealing from a smart device

Myth: A smartphone or smart watch can be stolen and used to make purchases from your account.

Fact: Your smart device does not know your card details, but only an encrypted version of your card number that allows it to make payments. Additionally, smart devices are protected in ways that cards are not – for example, by a screen lock.

So there you have it. Contactless technology doesn’t sacrifice security for the sake of speed. In addition to the use of encrypted data, contactless payment providers have robust fraud detection systems in place to spot any suspicious activity. As a retailer, you can feel confident in offering the contactless option to your customers.


Key takeaways

The popularity of contactless seems set to continue sky-rocketing, particularly as more and more customers embrace mobile wallet payments. What you need to know as a retailer is that contactless payment methods offer high security, as well as greater convenience.

Accepting contactless in your business has numerous advantages. The more customers use this method, the more quickly they can be served, and the happier they will be! That’s a win-win situation for retailers: higher takings, higher customer satisfaction, and simpler cash management.

It’s easy to let your customers know that they can use contactless to pay you. In-store, clearly placed signs, electronic reminders on the terminals, and friendly reminders from staff can all encourage customers to get on board with contactless. Mobile payments can also be incentivised through loyalty programmes, allowing users to earn points or special discounts.

If you’re not already set up to receive contactless payments, a CCV solution will provide everything you need to get started. Feel free to contact us for more details.