There is no beating around the bush, convenience is king when it comes to payments. Currently, contactless payments are set to reach $2.5 trillion in 2021; a noticeable mark-up from $1.7 trillion in 2020. If you are currently a merchant using contactless NFC terminals, then you need to become more comfortable around this technology if any issues occur. We’ve devised a helpful guide to understanding the world of contactless payments.
How does Contactless work?
There is a level of automation when it comes to the ritual of a consumer purchasing goods using contactless. They enter the store, go to pay, and either use their debit or credit card to purchase the goods by simply ‘tapping’ the terminal. There is also the method of using a digital wallet, built up of third-party hosts (e.g., Apple Pay), on a smartphone to also tap-to-pay.
What’s not part of this ritual is knowing the complex systems in the background.
Tap & Pay (the colloquial use of contactless) uses a technology called Near Field Communication (NFC). This essentially utilises radio transmissions to allow funds to pass from the bank to the retailer without the customer needing a pin or signature. While this may seem to summarise the process, there’s more to NFC technology to understand.
What exactly is Contactless NFC?
NFC transmits secure data using a similar security infrastructure as EMV (Europay, Mastercard, and Visa) employs.
EMV’s are simply dynamic bits of data, completely unique for each transaction which cannot be replicated by fraudsters. NFC is very much so dependent on EMV’s to work.
In other words, imagine the contactless payment being a certain encrypted message, this message can only be decoded by a terminal that uses NFC. Once the ‘tap’ occurs, the message is decoded, and the payment can be locked in.
This technology has been around since 2010 in terms of implementation into Android machines, now this method of data communication is taking over the payment industry.
Is NFC Safe?
There are some famous common myths surrounding NFC payments that can cause concerns for merchants when considering enabling NFC on their own terminals. One of these is known as ‘swiping’, which would suggest a fraudster can carry their own mobile terminal and simply get into proximity of your card to start a transaction. There are many reasons that this simply wouldn’t work:
- The technology required in activating NFC requires very close proximity to activate, within a few centimeters
- NFC utilises a one-time code security measure that accompanies each unique transaction, the information behind this does not contain sensitive information and is extremely limited
- Transaction limits cap now at £100 per transaction for contactless, meaning fraudsters cannot empty a customer’s bank account and would be covered by their bank’s zero-liability policy
Bottom-line: NFC has multiple security measures to ensure customer protection. Since this technology is becoming more widely universal, we can only anticipate further security measures in the future.
What can BMS Do?
NFC technology is fast, secure and enables the acceptance of new generations of customers to become increasingly wallet-less. Our current machines can all accept mainstream Tap & Pay payment methods, which increases the number of customers a business can handle due to the speed of transactions. This efficiency does not eclipse our contract transaction rate pricing, all fees regarding payments will be told with complete transparency.