How Safe are Contactless Payments?

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Imagine you and your friend make a bet. You trade your mobile-wallet enabled smartphone for their credit card to see who can make the most purchases in a single day without getting caught. While you might feel separation anxiety from handing over that precious smartphone, you know your money will be safe. Your friend’s credit card, on the other hand, would be much more secure in their old leather wallet.

In a world of increasingly contactless payments, it’s no surprise that consumers have security concerns. Most purchases today are made through credit and debit cards, which puts constant pressure on financial institutions to improve security and maintain consumer confidence. These plastic cards were traditionally enabled by a magnetic stripe that allows access to the cardholder’s account at the time of purchase. Although this practice is safe in theory, it could become a huge problem if this account information gets into the wrong hands. This is exactly what happened during the holiday season in 2013 when Target’s database was breached. Nearly 40 million customers had their credit and debit card information stolen, while Target faced over $18.5 billion in damages. And large data-breaches are only part of the problem. Small-scale hackers have also used cheap and accessible magnetic readers to steal people’s card information and use it to create fraudulent cards.


Thankfully, many credit and debit card companies in the United States and abroad have improved their security by introducing EMV chips. These chips create a separate transaction code each time the plastic card is used to make a purchase, so it’s not directly linked to the buyer’s personal information. They are also extremely difficult to replicate, thus offering protection that magnetic stripes do not.

While EMV chips have reduced the risk of credit-card fraud and data breaches, they are not foolproof. There are still stores without EMV chip readers, and consumers who have not yet converted their cards. Additionally, purchases made with EMV equipped cards do not always require a PIN or signature for additional verification. This makes it possible for someone to use another person’s card without immediately raising suspicion at the time of purchase.

Thankfully, ever-advancing mobile wallet technology involves new security measures that are often safer than using plastic cards. Mobile wallet transactions are highly encrypted at the point of sale, generating a unique set of numbers that is completely unrelated to the cardholder’s account. Even if stolen, these numbers would be virtually useless to a criminal. Additionally, mobile wallets like Apple Pay and Google Pay often require biometric authentication‒such as a fingerprint or face recognition‒which cannot be replicated. Therefore, even if a smartphone was stolen or misplaced, nobody other than the card owner would be able to make purchases on that mobile device. Finally, mobile wallets are easier to keep track of and are harder to lose. Most people check their phone over a hundred times a day and keep their devices in-hand or nearby at all times. Therefore, the likelihood of someone misplacing or forgetting their smartphone is far slimmer compared to their physical wallet.

Like any new technology, mobile wallets may take a little time to catch on completely, but the revolution has already begun. In fact, Google Pay, Apple Pay, and Samsung Pay combined are projected to reach 450 million users by 2020. This comes as no surprise. In many international markets, like China and India, mobile wallets are already an integrated part of people’s daily lives. With innovative security features and increasing capabilities, the mobile wallet could soon take center stage as the most popular way to pay.

When will you join the mobile wallet revolution?


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Ariana AlessandriComment