Thanks to COVID-19, most of us really don’t want to hand our card to someone or touch a potentially contaminated PIN pad on a POS device. Questions about passing germs and touching common surfaces have boiled to the top of our everyday thoughts.
What if there was a way to pay without worrying about the cashier handling your card or whether the payment processor has been sanitized?
Let me introduce you to the world’s newest buzzwords: contactless payments.
What Are Contactless Payments?
Investopedia defines contactless payment as a “secure method for consumers to purchase products or services by using a debit, credit, smartcard or another payment device by using radio frequency identification (RFID) technology and near-field communication (NFC).”
Now that may sound confusing. Essentially a contactless payment is exactly what the title states – a way for you to make a transaction without handing the card to the cashier, swiping your card, or even touching a point-of-sale terminal. This process allows customers to tap-to-pay rather than inserting your card into a machine. Contactless transactions are made through your phone, card, watch, key fob, bracelet, or other enabled items.
However, only NFC-enabled cards allow for no-touch transactions. Your smartphone is already equipped with this chip for services like Apple Pay and Google Pay. Most banking cards are being issued with the NFC chip as the U.S. begins to migrate towards this new tap-to-pay technology. If you have noticed the sideways wifi symbol on your card, this is an indication that your card has the tap-to-pay functionality.

Technology Behind Contactless Payment
Contactless payments are possible through near-field communication (NFC). Both the card and card reader must be equipped with this in order for the transaction to work.
This technology allows the chip in your card – or phone or smart-watch – to emit secure, short-range radio waves that communicate with the point-of-sale (POS) terminal. Purchases made using this method are as simple as holding your payment method near the POS terminal.
The History of Contactless Payment
Surprisingly enough, contactless payment has been around for decades. The first example was in Seoul, South Korea in 1995 when the transit system began to use contactless bus passes.
Since then, and especially more recently, the method has exponentially grown.
The United States is slightly slower than other countries in adopting new transaction methods. However, most retailers have moved over to NFC-capable terminals and almost all major banks in America offer ways to make contactless payments.
As the world is trying to socially distance and stay healthy, contactless payment is gaining more popularity. Mastercard reported that there was an uptick of over forty percent in contactless payments in 2020.
However, being creatures of habit, many people still have trouble trusting this new method of payment versus the traditional way of paying.
This brings us to the question – is contactless payment safe?
In short, yes.
How Safe is Contactless Payment?
Many people fear that sending data wirelessly is easily intercepted. This is certainly not the case with contactless payment. For all intents and purposes, it’s just as safe as using the chip reader.
Any time information is shared between a payment method and POS terminal, the data is encrypted. Furthermore, to ensure the process is even safer, the transaction uses a one-time code that has no value outside of that transaction.
Meaning even if someone was able to get the information from the two inches between your payment and the card reader, the information would be essentially useless.
Compared to the old magnetic strip technology, contactless payment is exponentially safer. With magnetic strips, people could steal and clone the data on your card and make a completely new one, leading to fraud. This process is not possible with NFC/EMV chips.

Why Should I Use Contactless Payment?
Many people are coming around to contactless. In fact, one in three card payments is now contactless. But if you’re still not convinced, consider these advantages for contactless payments.
It’s Secure
Security is (and should be) a top priority for most businesses, especially in the fintech industry. NFC technology certainly helps make transactions as secure as possible. As the transaction goes through, all data is encrypted and uses a unique, one-time code, making it nearly impossible to clone the data. Secondly, the card or mobile device must be within centimeters of the POS terminal for tap-to-pay to work. Thirdly, the transaction is verified by using two-factor authentication or fingerprint when using your mobile device.
It’s Fast
Contactless payments don’t require a Personal Identification Number (PIN). It’s as simple as holding your card or phone up to the reader – and you’re done. Much faster compared to inserting a card in the chip reader, declining cash back, then entering your PIN – all to wait fifteen seconds for the payment to go through.
It’s Contact-Free
This is a given – but it can be understated. We’re all trying to stay safe and healthy. The pandemic has made many realize how dirty public surfaces can be. Yes, companies are taking extra measures to ensure everything is cleaned and sanitized – but this doesn’t eliminate the risk. With contactless payments, you don’t need to touch the reader that potentially hundreds of others already have.
It’s Convenient
Contactless doesn’t have to be done with a debit or credit card. Think about Apple Pay, Google Pay, or Samsung Pay – these are virtual wallets that eliminate the need to carry around a physical wallet. Say you’re going to the beach or on a hike – you don’t want to lose your wallet, but may want to buy something on your outing. Using a contactless payment method makes it possible to pay without physically carrying your card as long as you have your mobile phone or NFC-enabled bracelet or key fob like those offered at Marygold & Co.

Risks Of Contactless Payments
Like anything, contactless payments have risks, but NFC technology is so advanced it is less susceptible to hackers than traditional card technology and improvements are adding layers of security to protect user data. However, the impossibility of interception can’t be completely guaranteed:
Because there is no PIN entered when using contactless, whoever is physically holding the card is able to make transactions. However, there are normally lower limits set on the card for extra protection. Enhanced security controls, like Marygold & Co. offers, will enable you to manage your own limits and turn on/off contactless payment capabilities. Keep track of your card and freeze it anytime one goes missing.
How to Get Started
Most banks will offer forms of contactless payment, be it on your smartphone or your credit card.
Start by using Marygold & Co. for all your financial needs and transactions.