Traditionally, the term “contactless payments” referred to EMV payment solutions based on near-field communication (NFC) technologies. Almost every payment card or app user nowadays is familiar with such technologies as Visa payWave or MC PayPass, not to mention Apple Pay and Google Pay. From cardholder’s perspective it is easy: you just “tap” the terminal with your EMV card or gadget, and transaction comes through.
A new perception of contactless payments
Presently, the economy on both macro and micro-levels is striving to adjust to new realities, brought by coronavirus business impact. Social distancing requirements increase the share of various remote and card-not-present payments among payment types. At POS (where buyers are physically present), EMV contactless payments are more often preferred to card swipes, PIN-involving transactions, cash payments and checks. Digital person-to-person payments prevail over cash and check-based financial interactions. Besides that, in order to mitigate the surge in fraudulent activity, payment card industry is working to improve payment security through introduction of new PCI standards and recommendations.
In view of these developments, the concept of “contactless-ness” might be interpreted in a much broader sense than before. No contact between buyer and seller, or, in the general case, between sender and receiver of the payment (all interaction made digital). No contact between credit card and payment terminal. No contact between cardholder data and payment applications. All these aspects of contactless-ness apply to the current strange and challenging times.
Contactless payments versus cash
Although cash money is commonly considered to be a transmitter of infections, even now some people prefer to withdraw cash from their bank accounts and have it at hand. They fear that their savings, stored in banks, might get frozen as a result of economic recession 2020. However, the banks, in their turn, are encouraging customers to stick to EMV contactless payments and perform all banking operations remotely. Moreover, in view of rescue packages, approved by most countries (in the US only they exceed $3 trillion), the banks should be fine. So, all kinds of payments will, probably, continue more or less as usual even during pandemic peaks (only some payment types might be preferable to others).
Limitations of contactless payments
Traditional NFC-based contactless payments involved several kinds of problems, some of which currently become more relevant than ever. Primarily, maximum contactless payment amounts were always limited (especially when a payment was both PIN-less and contactless). Some countries, such as the UK, favor chip-and-PIN transactions. During the pandemic, the UK increased the contactless transaction caps a bit. However, buyers still have to input PIN manually, physically touch the terminal, and increase the risk of contracting the disease. In the US contactless transactions are mostly PIN-less. So, while from sanitary standpoint, they are safer, from card fraud prospect standpoint they are less secure than in the UK. In this context, merchants need to find some compromise between payment security and public health.
Key fraud protection tips
As we’ve mentioned above, credit card fraud levels soar as businesses, especially, smaller-size ones, and their clients, fall prey to hackers and fraudsters. So, let us share some of the key recommendations of PCI security council, regarding contactless payments in times of lockdown and economic recession:
- Further reduction of sensitive cardholder data exposure;
- Usage of stronger, harder-to-hack passwords;
- Timely updates and patching of payment software;
- Stronger encryption technologies;
- Careful choice of payment partners.
Conclusion
Contactless payments, initially devised to save cardholders’ time and enhance payment security, now gain new relevance in view of social distancing requirements, induced by the pandemic. While the overall percentage of contactless and remote payments increases, sophisticated hacking and phishing methods and rising consumer fraud levels make companies and PCI standards council come up with new fraud mitigation solutions and tips.
So, if you are a merchant or just a cardholder/payment app user, it is high time to stay safe by following “contactless lifestyle” and, at the same time, minding the security of contactless payments.
