Contactless Payments – The pros and cons of tap and go

Information verified correct on February 19th, 2017

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.

What is Near Field Communication (NFC)?

NFC Tap and Go Technology

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?

Pros

  • 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.

Cons

  • 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.

St.George Complete Freedom Account

Tap and pay bank account offer

  • $0 monthly fee when at least $2,000 is deposited per month or when opening a Complete Freedom Student account, otherwise a fee of $5 applies per month
  • $0 ATM withdrawal fee at 50,000+ ATMs globally
  • Visa Debit with payWave
    • Compare contactless payment debit cards

      Rates last updated February 19th, 2017
      $
      Monthly Account Fee Debit Card Access ATM Withdrawal Fee Fee Free Deposit p.m. Details
      NAB Classic Banking
      $0 monthly account fees.
      Tap and pay with your NAB Visa Debit card, NAB Pay for Android or NAB PayTag for iPhone.
      Visa $0 $0 No monthly account keeping fees. No ATM fees when using NAB and rediATMs. Open More
      ING DIRECT Orange Everyday Account
      $75 cash bonus up for grabs
      Get a competitive ongoing variable rate when linked with a Savings Maximiser.
      Visa $0 $1,000 No monthly account keeping fees. No ATM fees using any ATM in Australia if you deposit $1,000 each month. Open More
      Bankwest Qantas Transaction Account
      Earn Qantas Points on eligible purchases and on your account balance.
      Conditions apply.
      Mastercard $0 $2,000 No monthly fees when you deposit at least $2,000 into your account each month. Free access to Bankwest and CommBank ATMs in Australia. No overseas ATM withdrawal fees (charged by Bankwest) though third party fees may apply. Open More
      ANZ Access Advantage
      Apple Pay, Android Pay and ANZ Mobile Pay. Take advantage of Apple Pay by linking your ANZ Visa Debit card to an eligible iPhone and seamlessly pay for purchases with your phone.
      Visa $0 $2,000 No monthly account fee when you deposit at least $2,000 per month, otherwise a $5 monthly account fee applies. Free unlimited withdrawals at ANZ ATMs. Open More
      Westpac Choice
      $0 ATM withdrawal fee at 50,000+ ATMs globally.
      Via Westpac's Global ATM Alliance. Get Cash without your debit card (conditions apply).
      Mastercard $0 $2,000 No monthly service fee if you deposit a minimum of $2,000 per month otherwise $5 monthly fee applies. No ATM fees when using St.George, Westpac, BankSA or Bank of Melbourne ATMs in Australia. Open More
      Bankwest Easy Transaction Account
      Pay no ATM fees at over 10,000 ATMs in Australia (conditions apply).
      Mastercard $0 $2,000 No monthly service fee if you deposit a minimum of $2,000 per month otherwise $6 monthly fee applies. No ATM fees when using St.George / Westpac / BankSA ATMs. Open More
      BankSA Complete Freedom Account
      Open one in less than 5 minutes with Cardless Cash available.
      Visa $0 $2,000 No monthly service fee if you deposit a minimum of $2,000 per month otherwise $5 monthly fee applies. Free access to BankSA, St.George, Westpac and Bank of Melbourne ATMs. Open More
      Bank of Melbourne Complete Freedom
      Get Cardless cash and shop securely with your Visa debit card. Customise SMS and email alerts.
      Visa $0 $2,000 No monthly service fee if you deposit a minimum of $2,000 per month otherwise $5 monthly fee applies. Free access to Bank of Melbourne, St.George, Westpac and BankSA ATMs. Open More
      St.George Complete Freedom Account
      10% Cash back for online gaming purchases.
      Waived account keeping fees when minimum deposit is met with no minimum balance.
      Visa $0 $2,000 No account keeping fees, if you deposit $2,000 per month. No ATM fees when using St.George, Westpac and BankSA ATMs. Open More
      BankSA Express Freedom Account
      Get Cardless Cash, free SMS and email alerts.
      Visa $0 $1,000 Avoid ATM fees when using BankSA, St.George, Bank of Melbourne and Westpac ATMs. Avoid the monthly fee if you deposit $1000 into this account each month. Open More
      Bank of Melbourne Express Freedom
      Get Cardless Cash and PAYG branch and cheque services.
      Visa $0 $1,000 No monthly service fee if you deposit a minimum of $1,000 per month otherwise $3 monthly fee applies. Free access to Bank of Melbourne, St.George, Westpac and BankSA ATMs. Open More
      Eddit Grobler

      Eddie Grobler

      • 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.

      Shirley Liu

      Shirley is finder.com.au's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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      4 Responses to Contactless Payments – The pros and cons of tap and go

      1. Default Gravatar
        | April 29, 2016

        Hi finder.com.au,

        A lot of retailers ask for your card and tap for you. Does this void any protection under Visa Paywave/Mastercard Paypass policies since the card leaves my hand?

        • Staff
          Shirley | May 2, 2016

          Hi Aran,

          Thanks for your question.

          Visa’s Zero Liability Policy protects cardholders from unauthorised charges, so whether it’s you or the store clerk tapping your card, you’ll be covered.

          Hope this helps.

      2. Default Gravatar
        gary | May 28, 2015

        just paid by contactless payment but never showed on my account why is this

        • Staff
          Elizabeth | May 28, 2015

          Hi Gary,

          Thanks for your question.

          The transaction may not have been processed properly or it just may not have appeared on your account yet. You’ll need to get in touch with your bank/card provider to discuss any questions you have with your personal account.

          I hope this has helped.

          Thanks,

          Elizabeth

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