Fraud Protection & Compliance
As a result of COVID-19, the use of contactless payments is expected to rise 10–15% in the U.S. according to Mercator Advisory Group Analyst Peter Reville. This is an estimate he shared in a recent American Banker article. And we’re continuing to see increases of its usage worldwide. With this uptick in usage leaving many wondering just how secure this payment method is, I thought it was important to answer some commonly asked questions.
What exactly are contactless payments?
They're often referred to as “tap and go,” but there is actually no required contact for this payment mechanism. Simply hover a compatible card or smartphone payment option, like Apple Pay or Samsung Pay, close to the card reader until it acknowledges payment, often with an accompanying beep.
Are contactless payments secure?
Contactless is just as secure as other payment methods. While there have been reports of an increasing amount of fraud via this transaction method, it is not from a lack of security features. Bad actors follow the money. If consumers start spending in one channel or payment method over another, fraudsters follow suit with new ways to obtain illicit funds.
However, banks have their customers covered. Financial institutions won’t hold them liable if unauthorized transactions are promptly reported.
What other safety measures are in place?
There are several other safety measures in place:
- There are limits on contactless payment usage. Issuers can limit the number of transactions that can be fulfilled before they require the card to be inserted into the terminal for verification. Additionally, there are generally spending limits on contactless transactions, which further inhibits fraud.
- Contactless payments on mobile devices require user verification. Unlocking the phone and confirming one’s identity either by entering a PIN or use of biometric verification, whether that be through a thumb print or facial recognition, is a prerequisite for payment access.
Are there any new developments regarding contactless payments?
On April 1, UK Finance increased the maximum amount for contactless payments from £30 to £45 for our friends across the pond. Due to COVID-19, many people have turned to contactless payment in order to avoid touching cash or keypads. This move increases the kinds of purchases that can be made with contactless payments.
Where do I find more information about the safety of contactless payments?
I may be biased, but I would suggest checking out my full article on the security of contactless payments. You’ll learn a few more reasons why contactless payments are safe.
How else can I stay safe from fraudsters?
Here at FICO, we are driven by our core vision to keep people safe from fraud.
Check out a few resources we put together to help:
- 8 Tips for Avoiding COVID-19 Scams
- Stop the Social Engineering of Customers and Employees
- Elder Fraud: 5 Ways to Protect the Ones You Love
- Video: How to Protect Your Children from Identity Theft
Follow me on Twitter @FraudBird for more updates on the latest fraud topics.
