Can Contactless Credit Cards Stem Coronavirus Risk?

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If you’re concerned about picking up the coronavirus while on a shopping trip, you might want to avoid paying with cash or a card that requires you to touch a card terminal keypad.

Instead, you could use a contactless method of payment – a credit card or mobile wallet app on a phone or other device – that will minimize your physical interaction.

Here’s a look at how contactless payments work and why more people are using them.

What Are Contactless Credit Card Payments?

Contactless credit card payments take place when a consumer hovers a card with contactless capability near a merchant’s card terminal or activates a credit card on a mobile app.

The technology – which uses near-field communication, or NFC, to let the card, phone or digital device communicate with the terminal – is not new and has been used globally for years. In fact, four in 10 U.S. consumers own a contactless card, according to a 2019 report from Javelin Strategy & Research, a market research and advisory services firm.

Are Contactless Payments Safer Than Cash?

Paper money, coins and credit cards generally carry plenty of germs, although there hasn’t yet been any official guidance from health organizations that they are vehicles for the spread of the coronavirus. It’s always good to wash your hands or use hand sanitizer after touching cash or a credit card terminal, however.

People have adjusted their behavior since the coronavirus hit, according to two recent surveys:

  • About half of consumers contacted for a Mastercard survey said they are using cash less often or not at all since the pandemic started in the U.S., and 77% said contactless was a “cleaner way to pay.”
  • Half of the people polled in a American Express survey said they think contactless payments are safer for personal health than using cash or inserting or swiping a credit card.

Not surprisingly, companies have noticed a shift in preferred payment methods:

  • There was more than 100% year-over-year growth in Visa contactless payments at places like grocery stores and pharmacies, and overall contactless use in the U.S. has increased 150% since March 2019.
  • Mastercard reported 40% growth in global contactless transactions in the first quarter of 2020.
  • Discover’s contactless payments from cards and digital wallets increased 39% from the fourth quarter of 2019 to the first quarter of 2020.

“The health aspect is really what’s driving the usage right now,” says Linda Kirkpatrick, president of U.S. issuers at Mastercard. “What you’re seeing is merchants who did accept these products before now putting signs up: ‘We encourage you to pay contactlessly.’ They’re not only accepting, but promoting their acceptance, which is different than what happened before.”

What Are the Advantages of Contactless Payments?

In addition to potentially offering health-related advantages, contactless purchases are quicker than cash and other types of credit card payments and provide a secure way to pay.

Once your card is out of your wallet, or your phone or watch is activated for a particular credit card, it takes about two seconds to complete a contactless payment. Even better, it’s likely you won’t have to touch the terminal because most merchants do not require customers to sign after a contactless credit card purchase.

Security for contactless credit card payments is based on the same EMV chip security technology as the chip-enabled credit cards you insert into payment terminals. The EMV technology has reduced on-premise credit card fraud because it creates a one-time code for each purchase. If someone tried to steal the code, it would be worthless because it’s used just for that purchase.

Some terminals – such as those at gas station pumps – still rely on a credit card swipe that reads the magnetic strip on the card. In these transactions, the cardholder’s name, credit card number and CVV code are read by the terminal and, if stolen, can be used for other purchases.

Major card companies had required gas stations to install EMV-enabled terminals by October, although American Express and Visa have moved their deadlines to April 2021.

Some businesses haven’t yet converted to contactless-enabled technology. Still, most major retailers accept contactless payments, and the technology’s popularity continues to grow. Currently, 70% of Visa transactions happen at payment terminals enabled for contactless purchases, says Jack Forestell, Visa’s executive vice president and chief product officer.

“We expect the pandemic and its social distancing measures to supercharge demand for contactless payments,” says Margaret Weichert, managing director and North America payments lead for Accenture, a global consulting firm.

How Do You Set Up Contactless Payments?

It only takes a few minutes to determine whether you can make contactless payments on your physical credit card or add a card to your phone’s digital wallet.

A physical credit card enabled for contactless payments has a graphic that looks similar to a Wi-Fi symbol, with four curved vertical bars on the front or back of the card. It can connect with a terminal activated for contactless payments.

Mobile wallets – apps on a smartphone or other mobile device – use the same NFC communication as a contactless credit card when connecting with the payment terminal. Common wallet apps include Apple Pay, Samsung Pay and Google Pay. Some major banks and retailers also have their own mobile payment apps.

Once you load a credit card onto the app, you can use it to make in-store purchases. When you’re ready to pay, move your mobile device near the terminal to make NFC contact, then choose the card to pay with. You’ll need to finalize the payment with a PIN or other type of authentication, such as a face or touch ID.

The extra identification step before purchase makes mobile wallets more secure than physical contactless cards. Paying with a physical card usually doesn’t require anything more than a tap for authentication, which is a problem if your physical card is stolen and someone else is using it.

What Are In-Person Digital Payments?

The next time you visit a small business, you might not make a face-to-face credit card payment. Instead, your transaction might be all online. Businesses are working through payment processors to complete transactions without interacting at close range with consumers.

“We’re just seeing an acceleration in it as shelter in place orders have taken effect,” Forestell says. “There is much greater demand for those remote transactions.”

Visa, for example, uses the CyberSource platform to help businesses collect remote payments while customers are a safe distance nearby, such as in an auto repair shop’s waiting area or outside. The business sends a payment request link to the customer’s mobile phone via text or email, the customer fills out a form with credit card information, and a receipt is sent through email or text.

Another contactless credit card payment method is Click to Pay online checkout, announced by Mastercard, Visa, Discover and American Express in late 2019. With Click to Pay, online checkout should be quicker and more secure by eliminating the need to create or log into an account. You’re most likely to use Click to Pay for e-commerce transactions, but it could also be used for purchases that usually take place inside a store, such as ordering takeout pizza.

“Beyond contactless payments through a card or digital wallet, we’re also working closely with merchants to set up ways for their customers to prepay online, by app or by phone,” says J.J. Kieley, vice president of the payments consulting group at American Express. “And we’re helping merchants to program their payment terminals to no longer request a signature, which reduces the use of a shared stylus, pen or finger on the touch screen.”

As public awareness of contactless payments grows, consumers will expect businesses to have options available, Weichert says. “Contactless methods, where possible, are now deemed vital not just for convenience, but for our health,” she says.

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