Contactless payments |31 March 2021

Have you recently been to a shop and made a purchase using your bank card? Did the merchant ask you to only tap your card on the Point of Sale (POS) terminal and not enter your pin?

If your answer is yes, then you have experienced a contactless payment.

Amid the growing concerns of the impacts of Covid-19 across industries and organisations in the country, technology is now making significant impact in the world of payments. In Seychelles’ banking sector, there is a new buzzword: contactless.

While contactless payment is new to the Seychelles market, this service is already gaining popularity on the global scene. The Visa Rules, as amended in 2018, requires banks issuing cards – including banks in Seychelles – to ensure that by April 2023, all cards issued are able to make contactless payments.

The amendment in the Visa Rules is expected to benefit services providers and customers alike, through the reduction of fraud levels and improvement in the number of successful transactions. As per Visa’s Global Risk Analytics from March 2018, reported fraud levels have reduced by 48% for cross-border transactions since the adoption of contactless payments. In addition, it is noted that contactless payments have enhanced security features that meet international standards.

So, what is a contactless payment?

A contactless payment is a secure method for consumers to pay for products or services with a simple tap on a POS terminal.

A wave-like symbol that looks similar to a WIFI symbol on your card indicates that your card can conduct contactless transactions. It is important to note that contactless cards can only work at POS terminals with a similar symbol .

If you do not see the contactless symbol on the POS terminal, you can still use your contactless card through the current practice, which is inserting the card into the POS terminal.

Why should I obtain a contactless card?

The main purpose for introducing contactless cards is to reduce payment transaction time for small value payments, where PIN numbers are not required for purchases below a certain limit. With the current Covid-19 pandemic, contactless payment is even more relevant and beneficial as it limits contact with the merchant and the POS terminal and consequently, limits the risk of transmission of the virus.

It is important to note that transaction sizes on cards are limited for contactless payment. The allowable amount varies by banks. The following table provides the details of the limit for the different banks offering contactless cards in Seychelles.

How to make a payment using your contactless card

Making a payment with a contactless card is simple. After the merchant has put in the sale option and the amount, a green light will come on to indicate that the POS is ready to accept the payment. Place your card flat on the POS terminal and wait for a beep sound, which will indicate that the payment is confirmed. It usually takes less than half a second for the terminal to read the card details after which customers can remove their cards, and the payment is processed. Once authorised, you will receive payment confirmation that the transaction is complete.

Are contactless cards safe and should you be concerned?

Many people have been expressing concerns in regards to the touch and pay method and are wondering if this is safe. Contactless cards actually use the same dynamic security features as inserting a chip card.

There are also additional security features that are unique to contactless cards:

-          You cannot accidentally pay for someone else’s purchases at the checkout.

-          Your card needs to be within 1 to 2 inches of the payment terminal for the transaction to be approved.

-          And you will not be billed twice, even if you accidentally tap twice.

However, you should immediately contact your bank if your card is lost or stolen, or you believe there has been unauthorised activity on your account.

Benefits of contactless cards

There are multiple benefits of using contactless cards, for both consumers who use this mode of payment and merchants that have this service available.

For consumers

Contactless payments are fast and convenient for low value purchases. You do not need to carry much cash or count change, and is ideal when you are pressed for time, as there is no need to enter a PIN for transactions within the daily limits made available by your bank.

For merchants

The primary benefit of contactless payments is the operational efficiency it brings, resulting in reduced queues, enhanced customer experience and generating the possibility for increased sales volumes during peak periods. It is estimated that a contactless transaction is up to 60% faster than payments by cash or conventional cards. Additionally, as is the case with all card payments, the risk to merchants is lower considering that there is no cash exchanged at the till.

Contactless – The future of payments

As has been mentioned, the contactless technology is a convenient, simple and fast mode of payment through the use of a POS terminal, and it is argued to be laying the necessary foundation for the next generation of payment technologies.

Moreover, contactless payment is positively related to reduction in the use of cash and contributes to the move towards a cash lite society.

Talk to your bank for more information, including the availability of the contactless card option.

Contributed by the Central Bank of Seychelles