How do contactless payments work? And how can you be sure that you’re safe and secure when paying with contactless cards and smart devices?
Contactless payment is an increasingly popular way to make purchases. In the UK, we now make more contactless payments than cash transactions. It’s a quick, secure, and incredibly convenient way to pay.
In this blog post, we’ll tell you everything you need to know about contactless payments – from its background technology to the limits on your spending.
What is Contactless Payment?
Contactless payments avoid the need for you to enter your PIN (Personal Identification Number) at a payment terminal. Rather than inserting your card into the slot, contactless allows you to hold or wave your card, smartphone, and even your Garmin or Fitbit, over the terminal to process the transaction.
In the UK, payment terminals offering contactless payments are almost everywhere. And contactless isn’t limited to stores and social venues, either. Transport networks such as Transport for London (TfL) use this payment system for access and ticketing.
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How does a Contactless Card (or Device) payment work?
When you bring your contactless card or smart device within about 4cm of the payment terminal, information will be transferred to authorise your payment.
As the name suggests, no contact is required for these devices to communicate to each other. This is because contactless is powered by near field communication (NFC) technology.
As a high-frequency radio wave, NFC allows information to be transferred securely at close range. Your card or device will communicate with the payment terminal – which will in turn tell you whether the payment has been accepted or declined.
Whilst a contactless card will transmit your card details, mobile payment systems like Apple Pay, Google Pay, and Samsung Pay use a process known as tokenisation. This means that none of your financial data leaves your device. Instead, your device generates a new “token” for every transaction – meaning that vendors never have direct access to your actual details.
Contactless Payment limits and restrictions
Given that they’re not authorised by PIN, contactless transactions are usually subject to limitations on their value and frequency – to ensure greater security for both the customer and the vendor. These limitations differ from country to country and from bank to bank – but in the UK they’re fairly standard...
How much can you pay on a Contactless Card?
Contactless card payments have been limited by most banks and vendors in the UK at £30 per transaction. However, with the outbreak of COVID-19, this increased to £45 per transaction at the beginning of April 2020. Previous rules will still be in place, however. These include the requirement to enter your PIN if you spend £137 or more by contactless card in any single day.
How many Contactless Payments can I make in a day?
There is no limit to the number of payments you can make by contactless in a single day. However, if you pay for five transactions in a row with a contactless card, you will be required to enter your PIN – just to confirm that the person paying is still you.
Limits for Apple Pay and Google Pay?
Whilst these rules apply to contactless card payments, the restrictions on contactless payments with mobile devices differ.
For example, Google doesn’t put any limits on Google Pay itself. However, transactions using Google Pay are also subject to the £45 transaction limit for contactless card payments. This is set by the vendor, and stores like Ikea and John Lewis already permit transactions of a higher value via contactless.
The same applies to Apple Pay limits too. Banks including Revolut set no limit on Apple Pay payments. However, the store where you are making your purchase may well keep that £45 limit.
How safe is Contactless Payment?
Finding the right balance between security and convenience has been the main concern of contactless payment providers since the technology’s launch in 2007. Whilst demand for greater flexibility with contactless payments is on the rise, safety – both financial and otherwise – remains crucial.
Contactless payments are safe and secure – and even more so if you are required to input your PIN every five transactions or when the daily value is reached. These stop other people using your card freely without your knowledge. And with biometric security mechanisms (e.g. fingerprint and face recognition) and the tokenisation process, you can rely on the security of mobile payments via contactless.
There are also advantages for hygiene, which have emerged during 2020’s COVID-19 pandemic. Shoppers have been urged to use contactless to stop the spread of the virus – as both Chip & Pin and cash require physical contact.
Hopefully we’ve answered everything you need to know about contactless payment. For related topics, check out the links below:
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