22 April 2020
Are contactless payments the new norm or will the European commission’s ‘Strong Customer Authentication’ (SCA) regulation hold back the use of contactless payments?
The growth of contactless payments has previously faced some barriers with a lack of trust and understanding from some consumers. More from necessity than choice in some cases, the current COVID-19 situation has increased the use and acceptance of contactless payments due to the social distancing measures introduced in the UK. Not only are more payments being made using contactless cards and mobile phones, an increase in the limit from £30 to £45 has made it more convenient for shoppers to use contactless payments. This growth in acceptance of contactless payments is not just having an impact in the UK, other countries are also seeing an increase.
During the current situation, the advantage of making a contactless payment is that it helps people to be more socially responsible by supporting social distancing and avoids contact with a PIN pad. However, the SCA regulation requires cardholders to validate their identity by entering their PIN when they reach a cumulative spend of approximately £130 pounds (€150) or when five consecutive contactless transactions have been completed. This may lessen the perceived protection from COVID-19 that contactless payments may have with the cardholder as they will still be required to make physical contact with a terminal that potentially hundreds of other cardholders may have touched.
One of the main benefits of a contactless payment, is the user experience (Speed, convenience and security for personal information). High on the list of user experience requirements is interoperability (the contactless card or mobile device will work on most payment terminals). In order to ensure a wider acceptance of contactless payments, users need to be satisfied they can trust their card will work first time and that their payment is secure.
EMVCo is the global technical body that facilitates the worldwide interoperability and acceptance of secure payment transactions, overseen by the International payment system providers, Mastercard, VISA, American Express, Discover, JCB and China Union Pay. EMVCo currently have 1326 active approvals of PCD’s (Proximity Coupling devices) i.e. contactless POS terminals, while there are a total of 2681 active IFM (Contact Interface Modules) approvals in use. Although the traditional contact devices account for 68% of approved payment terminals, contactless terminals are growing at a faster rate.
In order to ensure that contactless card payments can be trusted, EMVCo has issued specifications that require all terminal providers to get their product tested and evaluated at an approved EMVCo lab. TÜV SÜD’s test lab in Fareham in the UK is approved by EMVCo, as well as Mastercard, VISA and American Express. The lab remains open to support the testing and approval of payment terminals during the UK’s COV-19 lockdown phase.