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Wednesday, October 1, 2014

Is it safe to accept contactless card payments?

By Charles Wallace

Contactless payments are gaining a lot of popularity of late, but not without some concerns. Fears over the safety of this technology have escalated given its nature. In a typical contactless transaction, you can just wave your card in front of a chip & pin machine to complete a payment. A PIN request is not always required in this case. The embedded chip on the contactless card stores all information about a cardholder such as names, card number, expiry date, and so on. These cards are powered by RFID (radio frequency identification) technology, which allows an embedded chip to communicate with card readers at a point of sale terminal.

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The main objective of contactless payments is to speed up transactions. But, customers are concerned about how safe this technology is given the fact PINs are not always required to authorize payments. This makes it easy to make unauthorized purchases if a card is stolen.

As a business owner, you may skeptical about supporting contactless payments since it can scare many customers. However, companies that support this payment method provide several security measures to protect cardholders.

Security measures for contactless payments

It is important to note that several security measures have been put in place to make contactless card transactions more secure. To begin with, chip and pin machines that support this technology operate in the same secure networks as other types of card readers. This simply means that if your business network is encrypted, the odds of losing data through a compromised contactless payment terminal are minimal.

Secondly, RFID debit or credit cards have a limit on the maximum amount cardholders can spend to make payments. For instance, you can only make purchases under £ 20 with a contactless card in most European countries. What’s more, contactless cardholders are required to provide their PIN after about four or five transactions. With these measures in place, thieves cannot make huge purchases with a stolen credit or debit card.

Lastly, contactless cards use Near Field Communications technology to interact with a POS terminal. This means that money can only be taken from a card during a normal transaction and not by someone having some sort of reader held in close proximity to a customer’s purse or wallet. It is unlikely for customers to incur charges inadvertently if their contactless cards happen to face a card reader in a retail store. If that were to happen, retailers would know because card readers make a beeping sound after charging RFID cards.

Despite security concerns with contactless card payments, these transactions are quite secure. This is because there are payment limits on a single contactless transaction. In addition, cardholders can only make a certain number of purchases before being asked for a PIN and contactless terminals operate over the same encrypted networks as other chip and pin machines. With these security measures, cardholders are protected from fraud in case of losing their cards. Therefore, retailers should not shy away from making contactless terminals part of their point of sale systems.

About the author: This article was written by Charles Wallace, a retail storeowner based in the UK. To check out the VeriFone compatible POS system he uses to support contactless payments in his store, visit http://www.i-pos.co.uk/.

Image: HLundgaard, "Mobile payment terminal" CC BY-SA 3.0