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What are contactless payments?

What are contactless payments?
Image source: Getty Images

Contactless payments burst onto the scene in 2007 and revolutionised the way we make card payments in this country. Its popularity shows no sign of abating, with 69% of adults having made a contactless transaction in the past year and £4.3 billion spent per month using the payment technology.

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But wait a second… what exactly are contactless payments? How do they work? And is it safe?

What are contactless payments?

Contactless payments can be made using a credit card, debit card, mobile phone or even a wearable device. They are typically for transactions of £30 and less, and are made by touching the device or card to a terminal. You will know if your card is contactless if it carries the contactless symbol.

How does it work?

Though the process is quick and easy for the consumer, the ‘how it works’ is where is gets a bit technical.

Contactless payments work using radio frequency identification (RFID) technology. When you touch your card or device to the terminal at a shop or a restaurant, the purchase information will be transmitted to the terminal and on to your bank or payment-card provider.

In order for the transaction to be successful, the card or device needs to be a few centimeters away from the terminal. So any rumours suggesting that waving your card about in a public place could result in making unwanted contactless transactions are just untrue.

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The process involves multiple layers of security embedded within the card or device to protect it from fraud. Added to that, every so often you will be required to enter your PIN for a transaction as a security check.

Is it safe?

In short, yes it is. It carries the same level of security as using your chip & PIN. It is near impossible for someone else to gain your account information from a contactless transaction.

Firstly, because of how close the card has to be to the terminal for the transaction to work, and secondly because the information transferred in a contactless transaction is exactly the same as the information on the front of your card. To date, in the UK, there have been no reports of contactless payment fraud when the account holder has had the card in their possession.

The only area of weakness is if your card is lost or stolen. If you can’t find your card, then it is best to report it as lost or stolen immediately. Someone else could potentially make contactless payments if they have it in their possession, but the amount they can charge is capped at £30 per transaction. Plus, banks monitor card accounts for unusual activity which could indicate fraud.

Similarly, if you are concerned about card scams using contactless terminals, then you can rest easy. In order to accept a contactless transaction, the retailer or restaurant would need a retail account in order to process the transaction through the card system. There are stringent security checks on new accounts in order to prevent fraud.

Is contactless the future?

It certainly seems so. The popularity of the contactless payments is evident in how quickly consumers have adopted it. The ease and simplicity of it means that the UK is moving closer to becoming a cashless society. Who knows, next steps could lead to increased mobile payments and eventually no physical cards, with everything stored on your device or phone. But for now, most cards will come with that little contactless symbol which means that all you need to do is tap and go.

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