Are contactless payments safe?

Contactless payments — also known as touch-free payments — are becoming increasingly popular due to their ease and convenience. Instead of using cash or swiping a card, shoppers can make a purchase simply by tapping their card or mobile device.

Reports estimate that 41% of shoppers plan to shift to digital-only payments within the next two years¹, while contactless payments are expected to increase 221% by 2027.² And as with any payment method, it’s important to consider the safety aspects associated with it. Contactless payments are generally considered to be a secure payment method.

In this article, learn about the various touch-free ways to pay, the potential pros and cons of these payment methods, and what helps make contactless payments safe.

What are touch-free payments?

Touch-free payments are ways to make a purchase by simply tapping a contactless payment card or smart device to a payment reader. No need to hand over cash, swipe or insert a card, or manually enter information into a card reader.

Different types of contactless payments may include:

• Tap-to-pay debit or credit cards. Tap a contactless debit or credit card to a card reader at checkout. Tap-to-pay cards use NFC (near-field communication) technology to transfer information between a card and device.

• Digital wallets. Use a digital wallet to securely store payment information on a smart device. Then tap or hover a device over a card reader to pay.

• QR codes. Scan a QR code to easily access a business' payment app or portal. QR codes may make it easy to complete contactless payments with a phone.

What makes contactless payments safe?

Tap-to-pay cards and devices use near-field communication (NFC) technology to securely transmit payment information. Payment information is encrypted with unique, one-time codes every time a transaction is made. So even if a hacker could intercept a transaction, they likely wouldn't be able to see a person's account information.

Users can protect their digital wallet by safeguarding their mobile device with features like biometric authentication, passcodes, and device wipe after failed authentication attempts in the event of physical theft. For example, people can use passwords or biometrics to unlock their smartphone, making it difficult for others to access their apps and secure payment information.

Potential benefits of contactless payments

In addition to security, some potential advantages of contactless payments include:

• Health. Touch-free payments may be safe for health reasons since shoppers don't have to touch keypads or physically exchange cash or cards with a vendor.

• Convenience. With contactless payments, there may be no need to pull out a physical wallet or withdraw cash from an ATM.

• Speed. Just tap and pay to make a contactless payment in seconds.

Potential downsides of contactless payments

It's also important to understand the potential downsides of contactless payments, including:

• Availability. Some businesses and vendors may not accept contactless payments.

• Setup. It's typically easy to set up contactless payments, but some may find it tricky to get started with certain payment methods, such as digital wallets.

• NFC interception. It’s possible that malicious actors may try to tamper or intercept data in an NFC exchange. This may be referred to as a man-in-the-middle attack. While payments using NFC require the two users (e.g., the payment method and payment reader) to be in very close proximity, it’s possible someone could try to “eavesdrop” on the transaction to intercept the exchange.

• QR code scams. Scammers may put up QR codes or send QR codes that direct people to fraudulent websites intended to steal information. Only scan or open QR codes from trusted parties and never enter payment information without verifying the legitimacy of the website.