Contactless payment systems include credit and debit cards, key fobs, and other mobile devices such as smartphones that allow you to make secure payments simply by holding the card or other device over the reader. While there are some similarities between contactless payments and mobile payments, which can also be made on your smartphone, the main difference between the two is that mobile payments generally use a broader cellular or Wi-Fi network, while contactless payments use one require close physical proximity.
Contactless payment cards are regular chip-and-pin cards with an additional antenna that enables secure contactless communication between your card and the reader. Typically, contactless credit and debit cards have a maximum range of about two inches, meaning they have to be held fairly close to the reader to pick up its radio frequency. As soon as the signal is received by the card's antenna, the payment is made. The proximity requirement also helps avoid accidental and erroneous payments. On the subject of failed payments, let's discuss the top pros and cons of contactless cards.
Pros and cons of contactless payment
Some banking customers are concerned about the security of contactless cards. The main security issues relate to what happens if you lose your card or it gets stolen. The answer is that unless you manage to block your card before someone tries to use it, you will very likely end up losing a small amount of money. The good news is that banks have come up with several security tricks to minimize the risk of losing money in the event of a theft. All contactless cards set relatively low limits on the amount you can spend without entering your PIN. These limits vary from country to country, ranging from 10 EUR in the Baltic States to 1000 CNY (~137 EUR) in China. In addition, many banks require you to enter your PIN after 3-5 consecutive contactless payments, even if the transaction does not exceed the spending limit. If your card falls into the wrong hands and you lose money, your bank may offer a refund.
Still, there is an opinion that banks see contactless as a way to make money on shopkeepers who bear the cost of the merchant terminals that support contactless and for processing transactions, and that this comes at the expense of the security of the money of the Customers. This cost could explain why in some countries relatively few retailers offer the option of paying with contactless cards. This means you may not be able to use the contactless payment method your new card offers anywhere.
Contactless payment - the future of the bank card?
The main advantages of contactless payment cards are convenience and time savings in each transaction. These are the two main reasons bank officials believe contactless is the future, not just for credit and debit cards, but for smaller payments in general. Technological advances are increasing the popularity of contactless payments among both customers and retailers. According to MasterCard, around one billion contactless payments were made in Europe alone in 2015, an increase of 150% compared to the previous year.
One thing to consider before declaring contactless payments the future of our everyday transactions is the limit on each payment. Currently, contactless payments can only be used for a small portion of transactions due to low spending limits that vary from country to country. At some point, therefore, banks will face a serious choice – between raising these limits, which could jeopardize the safety of their customers' money, and maintaining the volume of contactless payments at a certain level.
Banks that offer contactless payments
One bank that is very interested in contactless payments is Barclays. As early as 2010, Barclays had started replacing its regular credit and debit cards with new contactless cards. Since then, it has gone much further, introducing new digital means of payment to its customers - such as bracelets, keychains and even a sticker.
Other banks around the world have been issuing contactless payment cards to their customers for a number of years. HSBC started replacing old, expired cards with new contactless cards in mid-2014. Other banks like the Royal Bank of Scotland follow suit
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