With credit card and smartphone: This is how contactless payment work.s

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Mobile payment has been possible for a long time.

Mobile payment has been possible for a long time.

Money can be conveniently transferred from one to the other via PayPal or other eWallets. Now contactless payment will soon also be possible in the supermarket. NFC is the technology behind the contactless payment method. But is contactless payment safe? And how does it work at all?

Actually, it doesn’t sound so wrong. In the end, contactless payment means that you no longer have to carry annoying cash with you. The way to the bank would also be unnecessary. And if you can’t get a taxi ticket after a night of drinking, well, you just pay with a chip card.

Payment by EC card in the supermarket may have saved some of the embarrassing moments at the checkout several times. Now this system is to be gradually expanded. Contactless payment is the name of the new technology that is supposed to make it possible to pay everywhere with a checking or credit card, without having to take the card out of your wallet at all.

In some countries in Europe something like this is already common. In Denmark, for example, no new cash has been issued since the beginning of 2017. Here, the switch to a cashless society is already a de facto decision.

The principle is the same here and here, and very easy to understand. Money cards like the current or credit card should be equipped with a radio chip in the future. In this way, a payment should then also be processed without contact, i.e. basically via radio, without a signature or PIN. This sounds comfortable, but it also fears misuse. As always, you should also inform yourself about this financial offer in advance.

NFC: How cashless and contactless payment works

NFC: How cashless and contactless payment works

The underlying technology for contactless payment methods is called NFC. Behind this abbreviation is the expression “Near Field Communication”, a new technology with which it is possible to transmit small data sets via radio. There are now many smartphones with integrated NFC technology.

So far, the NFC radio waves can cover a distance of up to one meter, if only under optimal laboratory conditions. In practice, the use is limited to a few centimeters, which may be present between the card or smartphone and the receiving device.

How does contactless payment work?

NFC numbers depend on the cell phone and the retailer. Retailers have a sign at the respective terminal that resembles the WLAN symbol, which contains four waves. The smartphone must then be held up to the terminal. Payment is completed after a beep. No more needs to be done.

What are the advantages of NFC?

NFC payment is intended to simplify payment processes. The payment process can be carried out for amounts under 25 USD without signature and PIN. Operation is also intuitive. Since NFC technology is openly available, application developers have flexible development options. In addition, NFC can be easily combined with many existing data transmission technologies.

This is probably why NFC is currently used primarily in larger companies, as a kind of admission ticket to the workplace. There, the risk of abuse is not as great as, for example, in payment activities. It must be said, however, that the NFC card or the NFC smartphone does not permanently transmit radio waves. This only happens when a receiving device “activates” the chip.

There are risks with NFC

There are risks with NFC

But you have to be careful not only when paying. In fact, there are quite freely accessible apps for the smartphone, with which it is easily possible to read out the stored data on an NFC chip. This, in turn, makes it particularly easy for criminals to literally get past protected records.

While this may not be a problem with the checking card, since the account number and routing number can also be coded, for example, via the magnetic stripe, the situation is quite different with the credit card. Because here it is possible to read out the credit card number and its expiry date. This in turn would enable the digital pickpockets to go shopping on the Internet.

Many online shops also require a number code that can only be read in physical form on the back of the credit card, but some online retailers deliberately do without this security question, probably for shopping r to make the customer faster and less complicated. In the event of fraud, the dealer is liable, but the bureaucratic problem must be borne by the customer for the time being.

Credit card companies are hoping for a breakthrough soon

Credit card companies are hoping for a breakthrough soon

At present, it is primarily the credit card companies that want to make NFC technology socially acceptable in Germany. Many credit cards are therefore already equipped with NFC. VISA and MasterCard are considered pioneers here. When it comes to checking cards, it is the savings banks and Volksbanks that increasingly use disruptive technology.

It has now almost become standard to issue checking cards with NFC. Customers are no longer asked. At the end of 2016, almost 14 million checking cards with an integrated NFC chip could be counted in Germany. That is after all 14 percent of all EC cards on the market in this country.

If you don’t want an NFC card, you have to contact your bank directly. But that’s only one side. It is questionable whether dealers will soon adapt the NFC technology. The trading institute EHI estimates that it is already possible to make contactless payments via NFC in around 60 percent of all larger corporations and 20 percent of all medium-sized companies.

Nevertheless, many in Germany cannot imagine a completely cashless society. This has to do with the still questionable security. But there are also disadvantages with regard to the simplicity, which is supposed to be decisive here. So far, only amounts up to 25 USD without PIN and signature can be paid without contact. In the case of higher amounts, the NFC payment is similar to the conventional EC payment. After that amount, a signature or PIN entry is required.

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