Understanding Contactless Payment

In this era of cashless payments, most of us use debit or credit cards for almost all our transactions. The need to always carry cash has been eliminated and so has the long queues at the ATMs. Innovative payment mechanisms like Contactless Payments make card payments instantaneous and enable a perfect shopping experience. All you have to do is tap your card or smartphone on a contactless card reader, and the process gets completed within 2-3 seconds.

How Does a Contactless Payment Work

Making payments using a contactless card is very convenient and straightforward. Here is how you can use it.

1. When you tap your contactless card or bring it near the merchant’s point-of-sale terminal, it generates a unique cryptographic code to initiate the transaction.

2. The card reader then transmits the data to a card processing network such as American Express, Mastercard or VISA. The network checks the data for any possible fraud. If everything is verified, it forwards the request to the card issuer.

3. The card issuer flags a stolen card, a purchase from an unusual location or a large amount transactional amount . It also checks the available balance before authenticating the transaction.

4. Once all validations are complete, the card issuer approves the transaction and sends the approval message to the merchant’s point-of-sale machine. This whole process takes just a few seconds to complete.

A contactless payment system uses radio frequency identification (RFID) technology. The card contains a chip and a radio antenna. This antenna picks up the signal when it’s close to a card reader and allows the transmission of information to the point-of-sale terminal.

Contactless mobile payments are also as easy to use as cards.

1. You need to unlock your phone, open the payment app, which has your credit or debit card linked to it.

2. Next, you tap on the screen of your smartphone near the near field communication (NFC) terminal.

3. Occasionally, you may have to confirm your identity by entering your PIN or scanning your fingerprint.

Types of Contactless Payments

There are various ways one could make a contactless payment. Here are some of the methods one can use to make payments.

Contactless debit and credit cards payments

These are, by far, the most popular payment methods when it comes to contactless payments. Most cards are dual interface cards as they contain both the EMV Chip and provision for contactless payment. Hence, this offers the flexibility of switching to a PIN authenticated transaction when the contactless point-of-sale terminal is unavailable, or the purchase is above a certain mandated amount.

Contactless mobile payments

Your smartphone can double up as a contactless payment device with apps such as Google Pay. These apps use near-field communication (NFC) technology that directly communicates with an NFC-enabled device to make the payments.

Rings, wristbands, smart cards key fobs and fitness trackers

Who would have thought that you could pay for your purchase by tapping your ring or fitness tracker? With creative RFID technology in play, even wearables like smartwatches successfully act as payment devices.

Problems with Contactless Payment

Contactless payment offers a convenient and faster way of making payments. However, like most technologies, by being vigilant, security concerns can be addressed. Here are a few ways to protect yourself from any contactless payment fraud.

Lost or stolen card misuse

The most obvious concern with contactless payments is when your card is lost or stolen. Since the transaction doesn’t require any additional authentication, it is very convenient to misuse your card. However, a pre-mandated limit per transaction helps reduce the impact of fraud.

Things to do when safety is compromised:

Report a stolen or lost card as soon as you notice it missing.
Check your monthly statements regularly for any fraudulent activity.

Skimming of card

Identity thieves may capture your card details and use them for making fraudulent purchases. All they have to do is, swipe your card using a fraudulent machine that captures and stores your card information.

To protect yourself from skimming, use protective card sleeves and wallets. These prevent card readers from reading your card inside the wallet. Additionally, check your statements regularly for any suspicious activity.

Contactless Payment Using American Express® Card

American Express offers you Contactless Cards, which also have the regular Chip and PIN. This gives you the flexibility to use both. All transactions exchanged between American Express and the store are encrypted and transmitted securely. Even if your Card touches the Card reader more than once, only one payment per transaction is processed. Your Contactless Amex Card is accepted by stores worldwide.

American Express Contactless Cards come with a 100% Fraud Protection guarantee. Amex doesn’t hold you liable for any fraudulent transaction if you notify them about any suspicious activity.