You’ve probably seen people paying with their phones or watches, instead of using cards or cash. Instead of inserting a plastic card, they wave their mobile device over the reader, as if they were performing a magic trick. And it is kind of magical! This type of payment is called a “contactless payment”, and it uses a credit or debit card that has been stored in a “digital wallet”. I think more people need to understand digital wallets & contactless payments, so that they might give them a try. Digital wallets are great for security and will decrease the chances of your card number being stolen.
The Basics
To make contactless payments, you generally need a smartphone that features NFC. (Smartwatches and tablets may also allow for this!) On your phone, you’ll need to choose and install your digital wallet app. You have 3 choices:
Once you’ve chosen and installed your app, you’ll need to add one of your payment cards. Many cards are accepted into these apps, but there are some exceptions. If your credit card is rejected by a contactless payment app, you can use a different card or talk to the card issuer for other options.
Once your card is enrolled into your digital wallet, you are ready to use it at any stores offering contactless payments. Keep an eye out for the universal symbol on storefront doors, windows and payment terminals to know where contactless payments are accepted.
The Security Benefit
I understand that some folks dismiss contactless payments as just a convenience item. “I don’t mind taking a card out of my pocket to pay!” is a common remark. But these Contactless Payments apps protect your account information in a significant way.
When you enroll a payment card into one of these Pay apps, your account number is not stored on your phone. The app builds a secure relationship with your bank, and every time you wave your phone at a reader to make a payment, a unique account number is created, for that purchase only. That one-time number makes the transaction go through, and then can never be used again.
The benefit to this is that your true card number is never out in the wild. Criminals have all kinds of tactics for learning your card information, so they can place fraudulent charges. Contactless payment apps defeat a lot of them:
- If you use Android Pay at a compromised gas pump, the hidden credit card skimmer captures a useless number from you.
- Let’s say you use Apple Pay at the grocery store, and their servers are hacked the following week. The criminals may get other people’s credit card information, but not yours.
- If you’re on public Wi-Fi and need to buy something over the internet, using Google Pay or Apple Pay (through your computer) would prevent your true card number from being seen in transmission.
It is true that bank cards in your wallet could still be skimmed and stolen, wirelessly. To help prevent that, I can recommend you also use a RFID-blocking wallet. You can find them as low as $20 on Amazon!
Some Cautions
If you use Contactless Payments, you’ll have to have a screen-lock on your device. Because otherwise, someone could steal it and start buying things with it! As you set up a contactless payment app, it will check and tell you if your phone’s security needs to be improved.
Contactless Payments are not universally accepted, but should be possible most large stores and chains. Some smaller companies may not yet accept them, because it requires newer card-reading equipment, or because it would increase their card-processing fees. But over time, this technology should become more and more widely adopted. Just keep an eye out for the contactless payment symbol, or branded symbols for Google, Apple and Samsung.
Very good information; never gave it much of a thought before.