Mobile Solutions
Accelerating Trend: Contactless Payments
October 13, 2020

Summary – Adoption of contactless payments is accelerating.
Issuers, acquirers and merchants must prepare for contactless payments options in order to get the benefits.

Over the last eight months, as the Covid-19 pandemic has required social distancing and avoiding physical contact whenever possible, the case for contactless payments has become even more clear.

As consumers stayed in during lockdowns, there was a shift from in-store, in-person shopping to online commerce and home delivery.
But as economies are reopening and consumers return to shops and restaurants, contactless payments are rapidly gaining importance.

Contactless card and mobile payments were already seeing a growing share of the overall payments landscape. Nearly all new payments terminals now have built-in contactless technology; the cost of contactless cards is greatly reduced; and most smartphones are now also equipped with contactless technology.

Consumers will always veer towards solutions that offer higher convenience and better security. The health and hygiene worries brought on by the pandemic have strengthened these preferences and accelerated the need to provide the right solutions.

It is likely that merchants that offer contactless payments will benefit, as consumers choose to spend where they can avoid unnecessary contact. Similarly, as customers are increasingly weary of physical contact, they may opt for a bank that offers contactless options with their cards.

For issuers, acquirers and merchants alike, now is the time to plan for the transition to contactless payments, if they haven’t done so already.

What are contactless payments

Contactless payments are payments where a contactless enabled card or a mobile device are “hovered” over a payments or point of sale (POS) terminal.

The card or mobile device and the payments terminal use Near Field Communications (NFC) to communicate with each other securely and complete the transaction.

Contactless payments are typically used for fast, frequent and low amount transactions. However, during the pandemic the maximum amounts for these transactions were increased in countries around the world, to widen the range of possible payments.

During the pandemic, contactless payments have been an attractive option, compliant with safety guidelines issued by global and national health organizations.

What are the benefits of contactless payments

For one, contactless payments are of course contactless – a payment can be made/received with limited or no physical contact, with the card or device a few centimetres away from the payments terminal. No need for handling cash or sharing POS terminals or pens/styluses. In an era of pandemic this is essential. 

In addition, because they do not require manually inserting a card into a terminal and then entering a pin on the keypad, contactless payments can be quicker, which can lead to a higher number of sales, as customers can move through the tills faster.

Contactless payments also make it easier to make payments of smaller amounts, which can replace typical small cash payments and therefore also lead to increased sales.

Are contactless payments safe?

Contactless payments are generally made either with a contactless enabled card or with a mobile device, such as Apple or Samsung mobile phones.

Contactless payments with cards are limited to a maximum amount (in many countries, around €30 to €50, although up to €100 in some). Entering a PIN is usually required for payments of amounts above the limit.

For mobile payments, the payer’s identity is verified by the device, either through a device PIN or a biometric method, such as a finger scan or a face scan. This is generally more secure and there is usually therefore no maximum amount limit for these payments.

During the payment, both the card/device and the terminal have to be genuine for the transaction to be valid, making them difficult to falsify or replicate. A digital number (a token) is then sent through the network, rather than the original card number, to authorise the transaction and payment. This way the card number is never at risk of being intercepted.

How do contactless payments work on a mobile device?

For a mobile device to be able to make contactless payments, it must have the right hardware and software. Principally, it must have the ability to communicate with the payments terminal (NFC) and it must have a payments-enabled app, such as a “mobile wallet”.

A mobile wallet is an app that stores payments credentials (for example payment card details) and enables payments with these credentials. A typical mobile wallet is Apple Pay on Apple iPhones or Google Pay on Android phones.

However, increasingly leading banks and other companies are developing their own mobile wallets or other payments-enabled apps, in order to extend the range of services offered to customers, for example as part of mobile banking solutions.
For a mobile wallet to be effective, it must be fast and secure, complying with the most advanced standards. And it must scale. In order to reach all customers it is essential that it works across platforms (iOS, Android) and that it offers payments with all cards issued (such as Visa, Mastercard, UnionPay, etc.).

What next?

Pri-Num provides a secure, scalable contactless payments solution for mobile, based on its Digital Enablement Platform, that enables the issuance, storing, and processing of credentials, such as payment cards. 

This can be integrated with a range of complementary services, such as mobile banking, mobile money, peer-to-peer transfers, loyalty programmes and more. Pri-Num is a qualified, certified partner of the leading card networks, including Visa, Mastercard, UnionPay International and others.

Contact us now for a discussion on how Pri-Num’s ready to go Digital Enablement Platform can help get mobile contactless payments up and running fast.