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Is Contactless Payment Safe and Secure?

Is Contactless Payment Safe and Secure?

With an increased incentive to provide “clean” and safe payment processing, contactless payment is finally getting its due credit in the U.S. This technology has already been widely adopted in Europe, Southeast Asia, and countries like Canada and Australia, where “tap-and-go” payment is the normal and expected method of payment.

America lagged behind on contactless payment for a few main reasons. First, banks put off the technology as it would cost slightly more to produce cards with the NFC antennae at a time they were already mandating EMV chips for “insert card” payments. Second, merchants were expected to pay more for POS systems that used a technology few consumers had, let alone demanded. And finally, American consumers simply felt no need or preference for contactless payments.

The benefit of being late adopters, however, is Americans are now able to rely on the proven track record of the security and safety of contactless payment shown in other countries.

How secure is contactless payment technology?

Perhaps the best argument for the security of contactless payments is who has really pushed the technology to the forefront. For one, the major credit card companies, including Visa and MasterCard, were big proponents of chip and contactless payment technologies. Every year, fraud costs these corporations tens of billions of dollars. With a vested interest in consumers using more secure payment methods, Visa and MasterCard began issuing new credit and debit cards with EMV chips and, now, RFID technology.

You will also find this technology used in U.S. Passports and by the Department of Defense. With security “clearance” by entities dealing with extremely costly and sensitive information, RFID and NFC technologies have been thoroughly vetted as safe and secure.

We also know from looking at other regions of the world that this technology is easy to learn, far more efficient, and—once experienced—a must-have for consumers.

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Can someone scan my information without my knowledge?

Many American consumers worried about their privacy with the initial launch of contactless payment technology several years ago. Some companies preyed upon this unfounded fear by suggesting the public needed “RFID shields” for their wallets and passports. However, as the technology has taken firm hold in Europe and begun to spread in the U.S., more people are beginning to realize this threat is extremely unlikely, if not impossible.

To understand why, let’s first review how the contactless technology works in practice. Contactless payments use either RFID (or its subset NFC in the case of smartphones) as the primary technology to transmit information via radio waves. With the frequency used, these waves can only be picked up when two compatible objects, a sender and receiver, are within 4 centimeters of each other.

Even if a skimmer somehow got within 4 cm of your card, the thief could not use the information to “print” a credit card and would not obtain any usable information for online purchases. That’s because the data transmitted is a “token,” or an encrypted, one-time-use-only representation of your credit card information which only an authorized POS system can decode. Skimmers would essentially receive a string of unusable characters.

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What is a digital wallet?

A digital wallet uses a smartphone as a contactless payment method. Users link their bank or credit card information to a secure app provided by the phone’s manufacturer, such as Apple Pay, Samsung Pay, or Google Pay. This information is immediately converted to a “token” that keeps the app from storing the actual bank or credit card numbers. Instead, each transaction is linked to a temporary authorization code. That means even if someone steals the phone or tries to interfere with contactless payment technology, they will be unable to use any of the information to complete purchases.

To use a digital wallet, the consumer simply opens the app with a fingerprint or password and holds the smartphone near an NFC reader, such as a cashier terminal or Genfare farebox.

Using a digital wallet can save a lot of time, particularly when looking at it from a business or service provider’s perspective. Studies show an Apple Pay payment on a Los Angeles Subway took just one second to process, whereas a magnetic card swipe took 12. This can shave several minutes off boarding times, keeping passengers from extending congregating, reducing line lengths and wait times, and making routes more efficient. Consumers usually find that their phones are more handy than digging a card out of a wallet, which may need to be dug out of a purse or bag, making the entire process easier for all parties.

Whether it’s a smartphone app or an NFC-enabled credit or debit card, contactless payments are here to stay in the U.S. Their security has been vetted and proven in real world experience, and the market is ripe for the transition to a faster, cleaner, and safer way to pay.