To tap or not to tap, that is the question when using Visa PayWave or MasterCard PayPass.
Visa PayWave and MasterCard PayPass are new ways to pay for your everyday purchases without your physical card touching anything. To use this feature you need to wave your card in front of a contactless terminal and your transaction will be processed. There's no need to sign a receipt or input a PIN to authorise a transaction.
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What is Near Field Communication (NFC)?
Near Field Communication, abbreviated NFC, is a technology that enables your mobile phone to securely transmit and receive information over a short range, typically requiring a distance of 4cm when making a payment. It is an upgrade of the existing radio-frequency identification (RFID) which combines the interface of a smartcard and a reader into a single device.
Visa PayWave and Mastercard PayPass have NFC tech that make contactless payment possible. Referred as 'tap and go', consumers can then either wave or tap their credit cards at counters with contactless terminals without the need of keying a PIN or signing a receipt.
What are the pros and cons of PayWave and PayPass?
- Convenient as you just need to "tap and pay" using your credit card or mobile phone without keying in a PIN or signing a receipt.
- Gives you peace of mind as you are protected against fraudulent transactions.
- Reduces threat of hackers who may scan cards and steal valuable information as NFC uses data encryption when sending sensitive information.
- Cost and time efficient for the average consumer.
- You do not have to worry with typing errors (such as incorrectly typing in your PIN) and connection is quicker on the contactless terminal.
- Retailers no longer have access to your credit card information.
- You are able to keep track of rewards and use points for your purchases made in coffee shops or miles redemption. Some banks even offer cash back and prizes when you use this feature.
- Convenient and quick checkout payments means lesser queues and lining up.
- Only a few yet have adopted to this technology so it might create confusion or frustration among users. Not all consumers are educated on this technology.
- Only consumers with smartphones or those with PayWave/PayPass credit cards can use this technology.
- You may lose your credit card and your account may be compromised.
- Risk of spyware or malware attacks and other viruses like any computer device in the terminal.
- You can't change the limit or choose the limit per transaction as chosen by the bank.
Frequently asked question: I'm a small business owner – should I get a contactless payment system?
If you run a small business, updating your card reader to one that offers contactless payments provides your customers with faster and more convenient card processing. However, upgrading could attract additional upfront fees and training to get used to the new system. Compare different card payment systems and weigh up the potential benefits versus the costs to decide if this option is right for your business.
- Eddie is the Divisional President: MasterCard Australasia
- He was previously SVP at MasterCard Southern Africa
"PayPass is a fast, convenient and safe way to pay for purchases of less than $100 and involves a simple tap of a card against a contactless reader, making it ideal for use when customers would generally use cash," says Eddie Grobler, Divisional President of MasterCard Australasia said in a press release.
"Contactless is the way to make and accept payments – it's quicker and more convenient for consumers and allows merchants to accept more payments at peak sales times. It helps reduce the delays caused by queuing or searching for change and, with consumers already noticing the benefits, we believe it will be available across a large number of retailers in the next couple of years."
Both systems contain a technology called NFC and requires you to hold the card within 4cm from the card reader and carries a unique security code per transaction for fraud protection. It carries the same layers of security as any other Visa or MasterCard Chip card and is backed by their respective Zero Liability Policy.
While it is convenient and efficient to have this payment method in place, a lot of consumers have questioned the security implications of using this technology. But Mr Grobler has announced there are plenty of security measures in the place.
"For online purchases, merchants will be required to offer MasterCard SecureCode authentication, or equivalent, for items over $200 and for purchases at the point of sale, we are ensuring that all cards and terminals will be EMV capable."
"These measures will add an additional layer of security to an already robust system."
"Trust is at the very core of our business. We want our cardholders to feel safe about using their cards which is why we are continuing to invest in stringent security measures. Between now and 2013 security for online payments will be a primary focus, which is great news for merchants and consumers alike."
What are other people saying about PayPass and PayWave?
What do you think about PayPass and PayWave? Let us know by tweeting to @finderau, or post a comment below.