What You’ll Learn

• • Find out about the key benefits and drawbacks of contactless payments, including their speed, security, convenience, and potential concerns like spending habits and privacy.

Do you remember the first time you made a contactless payment or saw someone in line ahead of you make one? Did it feel futuristic—maybe even kind of magical? Let’s take a closer look at how this “magical” technology works, along with the pros and cons that come with this quick and easy payment method.

What is Contactless Payment?

Contactless payments let you pay quickly by tapping or hovering your credit card, smartphone, or smartwatch at the checkout stand payment terminal. These payment options use RFID (radio-frequency identification) or NFC (near-field communication) technology to avoid the need to swipe or insert your card and enter a PIN. Contactless payments have become widely adopted in countries such as China, the U.K., Australia, and the U.S., particularly during the COVID-19 pandemic. While the convenience and speed of contactless payments have gained popularity among customers and businesses, these payment methods come with both advantages and disadvantages.

Security

One of the main advantages of contactless payments is enhanced security compared to older payment methods like magnetic stripe cards. Contactless transactions use encryption and tokenization to protect sensitive data. Each transaction generates a one-time code, making it harder for hackers to get their hands on your data. When your card has contactless payment capabilities, it is less likely that you will fall victim to card skimmers since you never have to swipe the card. Plus, with mobile wallets like Apple Pay or Google Pay, you get an extra layer of security with features like fingerprint or facial recognition.

It’s also good to note that Visa and Mastercard have zero liability policies that protect you from unauthorized transactions using your card.

Convenience

The convenience of contactless payments is undeniable. No need for cash. Heck, you don’t even need to bring your card (or even your wallet) if you’re paying with a mobile wallet on your smartphone or smartwatch. This means you can go for a run or a walk, just bring your phone, and still buy that snack or coffee when you stop for a break in the action. And for those of us who need to be more careful about germs, such as people with compromised immune systems, using a contactless payment method reduces the need for physical interaction or the handling of cash.

Speed

Another significant benefit of contactless payments is their speed. Transactions are processed much faster than traditional methods because inserting a card, entering a PIN, or signing for a purchase is unnecessary. This is particularly useful for small transactions in fast-paced environments like coffee shops, public transportation, or quick-service restaurants. Businesses love it too, because faster transactions mean shorter lines and happier customers.

Security Concerns

Even though contactless payments offer enhanced security, they are not without risks. One primary concern is the lack of a PIN requirement for smaller transactions. If a contactless card is lost or stolen, unauthorized purchases could be made before the cardholder notices and reports the loss. Although many credit unions and banks offer fraud protection, consumers may still experience inconvenience or stress in dealing with unauthorized charges.

If you lose or misplace your Salal debit or credit card, report it right away. You can also sign in to digital banking and temporarily lock your card.

Spending Habits

All the ease and speed of contactless payments does come with some potential downsides. Because contactless transactions are so quick and convenient, some people might find themselves making more frequent or impulsive purchases. The ease of tapping a card or phone can make it easy to lose track of spending, particularly for small, everyday purchases that add up over time. And for some people, not having to physically handle cash can make spending less real, making it harder to stick to a budget.

Dependency on Mobile Devices

While mobile wallets and wearable devices offer unparalleled convenience, they also create a reliance on smartphones and other gadgets. If a phone’s battery dies or the device is lost, you could find yourself in a pinch without access to your payment methods. For users who have completely transitioned to digital payments, this can be inconvenient and disruptive. It’s a good idea to carry a backup payment method, just in case.

Limited Acceptance

Despite the increasing popularity of contactless payments, not all merchants have the necessary technology to accept them. While major retailers often offer contactless terminals, not every business has invested in the tech needed to accept tap-to-pay transactions. So, you might still need to rely on good old-fashioned swiping or cash in certain spots.

Privacy Concerns

Finally, there are privacy concerns associated with contactless payments, particularly with mobile wallets. When users make payments using their smartphones or smartwatch, data-sharing between apps and retailers can occur. Although this data is often anonymized, some consumers may feel uncomfortable with the possibility of their shopping habits being tracked or shared with third parties.

There’s also the slight chance of unauthorized reading if someone gets close enough to your card with a scanning device. However, since NFC signals only work within a range of four centimeters or less, the risk of an unauthorized reading is slim.

So, What’s the Takeaway?

There’s no doubt that contactless payments offer convenience, speed, and security, making them a popular choice for everyday transactions. But it’s also good to know the potential drawbacks of these payment options so you can make an informed choice about whether contactless payments are the right choice for their needs.