Contactless Payments

Overview

Contactless technology is becoming a popular way of making payments or sending information. The process is enabled by a technology known as Near Field Communication (NFC), it works by a wireless chip that contains the user’s payment card details.

Users can make payments of up to £30 at stores, cafes and other outlets simply by waving their smartphone or contactless card over a contactless card reader, without the need to physically insert their card or use a PIN. You will see the symbol on cards and payment terminals where contactless can be used.

Other contactless devices

You can make contactless payments with a number of devices. The most common are debit or credit cards and smartphones, you can also use:

  • Fitness trackers
  • Watches
  • Wristbands
  • Key fobs
  • Stickers
  • Oyster card

As well as making payments, the technology might also be used for opening doors or even as a security pass. You can recognise contactless devices by the logo, which is made up of four bold lines making a wave symbol.

How does the technology work?

  • A contactless card has a chip that holds your account information and an antenna (a loop of cooper wire around the edge of the card) which picks up power from the signal sent out by a card reader.
  • A card reading terminal produces an electromagnetic field, when a card enters this field it is powered 'on'.
  • The chip and the reader communicate with each other using an encrypted (secure) language. The reader can then 'introduce itself' to the card.
  • The card will only 'reply' with a coded data transfer when it recognises the reader.
  • The card terminal will then confirm that payment is accepted, usually instantly.

Are contactless cards safe?

Banks do as much as they can to limit contactless payment misuse and fraud, such as:

  • Card issuers restrict the number of contactless transactions that can be made before the Pin is requested, to prevent fraud
  • The £30-per-transaction limit is another safeguard, however, our research suggests that some banks are failing to protect their customers properly

The risks

Whilst contactless payment is fast and convenient, users are also open to potential security and safety issues. Here we run through some things you need to be aware of.

  • Unknowingly paying for somebody else’s purchase when you pass your NFC card over a contactless reader when their transaction is being processed
  • Paying out of the wrong account because the card reader finds the wrong card
  • Having your financial information stolen, or your card cloned by the wireless signal being intercepted by fraudsters
  • Potential inability to make payments abroad owing to lack of common standards
  • Your NFC chip being wiped remotely, either in error or maliciously

Using contactless payments safely

  • Protect your contactless payment cards by investing in special sleeves or wallets so that they cannot be cloned (copied) by others, or used by you accidentally to pay for your own or others’ purchases
  • Avoid handing your card over, someone could run it through a skimming device, this copies the data from its magnetic strip
  • Make sure you read and understand your bank’s terms and conditions so you are clear who holds liability in the event of an incorrect payment or security breach
  • Always check your bank statements carefully to ensure that payments have not been taken from your account without your knowledge or permission, either on purpose or accidentally
  • Ask for a receipt, contactless users aren’t always offered a receipt, so if you want to keep track of spending and make sure you aren't being overcharged, you may need to ask for one

Will my bank refund fraudulent payments?

If your contactless card is stolen, or copied, your bank should reimburse you. Fraudulent transactions on contactless cards are protected by the same rules that apply to other card payments.

If you think a transaction was fraudulent, it is the responsibility of the card provider to prove that you authorised the payment or were negligent in not taking reasonable care of your card's security features and if it is unable to, then it must reimburse you. If you feel that your bank has acted unfairly, refer your complaint to the financialombudsman.org.uk, visit our web page 'Financial Ombudsman' for information on how they deal with complaints.