MasterCard is setting free contactless payments, with a move to end the cap on tap-and-go transaction values. The card giant says shoppers will be able to use their contactless device for high value payments at all contactless terminals across Europe by 2017. It’s made possible by services like Apple Pay, which means the user can be authenticated using a fingerprint or a PIN. When Apple Pay launched in the UK earlier this year some forward-thinking retailers waived the £20 (now £30) contactless limit from the start as consumers can verify who they are with the TouchID fingerprint scanner on the latest iPhone devices.
But this is only available at certain retailers – MasterCard will make sure all contactless terminals are upgraded by 2017 so they can allow high value transactions.
Contactless records broken
MasterCard’s move comes amid an explosion in contactless growth that is transforming the way people pay. In the second quarter of 2015, tap-and-go transactions in Europe grew by almost 170 per cent year on year. Spending tripled compared to the second quarter of 2014 across the continent, with British consumers leading the way as the amount they spent on contactless cards increased 560 per cent in the last 12 months. Retailers are already gearing up for accepting contactless at every point of sale terminal by 2020. In July 2015, 43 per cent of new terminals installed were contactless-ready. The momentum behind contactless is very strong.
Chris Kangas, head of contactless payments Europe at MasterCard, says: “The list of retailers accepting contactless never stops growing. Over the last quarter, we have announced new acceptance deals across Europe with major retailers like Ikea and McDonald’s. The drive to full contactless acceptance is taking hold.”
Tap twice and go
Clearly MasterCard is banking on consumers not being put off by the prospect of authenticating a contactless transaction. This is not necessarily a given – why bother with a tap-and-go payment if you need to go through an authentication process, however easy it may be? In terms of fraud, there is a strong case for contactless transactions even with a layer or two of extra processes like inputting a PIN. The risk of card skimming can be reduced, as the magnetic stripe is not in contact with any terminal.
Authenticating a contactless transaction will require a second tap of the device to update the card data held in the device. While not exactly onerous, it is an extra stage that could prove an obstacle. Critical to getting this right will be creating a standardised process that is the same in every retailer so consumers are not put off.
If MasterCard wants higher value contactless payments there is a fraud question that needs answering: how safe is your data when it’s transmitted using the NFC technology that smartphones rely on for carrying out a contactless payment? Researchers in the UK recently identified a “flaw” that makes it possible to steal card data as it’s transmitted between a card and the reader.
Peter Eisenegger, the security expert who helped develop European standards for contactless cards, told the Which? team behind the study: “It’s vital to protect consumers from fraudsters who have the know-how to develop mobile card readers with much greater reading distances than those used by retailers.”
But primarily it comes down to consumer confidence and perception – if they don’t trust a payment method, they are much less likely to use it. On that front they can be reassured, however, as despite the worries about the security of the data transmitted through the airwaves, the amount of fraud on contactless cards remain very low. In the UK it amounted to just £153,000 of losses during 2014, according to UK Cards Association figures. This equates to 7p in every £100 – making it one of the lowest fraud rates for any payment method.