Contactless payments with and without a mobile phone: This is

System, acceptance point and equipment overview

There are many advantages to paying without contact. It's easier, faster and more hygienic than cash. We will show you how to make contactless payments with or without a mobile phone. We will also tell you the security of contactless payments.

table of Contents

1. How does contactless payment work?
   

   1. How do I know if my EC or credit card is suitable for contactless payments?
      

   2. How does mobile contactless payment work?
      

2. Where can I pay with NFC in Germany?
   

3. How secure is the contactless payment process?
   

Contactless payments are on the rise in Germany. According to the Federal Association of German Banks, by the end of 2019, 30% of all Girocard transactions have been processed contactlessly. No surprise! Finally, the process offers numerous advantages for both buyers and sellers. As a result, you always have enough "cash" to account for change, and for smaller transactions you don't even need to enter a PIN. There is another factor in the corona crisis: the process is more hygienic and minimizes the risk of infection.

Even if experts like the Robert Koch Institute believe that it is unlikely that they will be infected with coronavirus due to cash exposure, many users and retailers feel more comfortable without cash at the moment. During the Hamburg-Alton tour, signs were still in many places in supermarkets and pharmacies, asking customers not to pay in cash, but to make contactless payments with a card or mobile phone. But how does it work? Below we will clarify all important issues regarding contactless payments.

How does contactless payment work?

The basis of this process is the so-called near-field communication technology, or NFC for short. This NFC chip can be found in most smartphones, ECs and credit cards. More and more POS terminals are also equipped with corresponding chips. After the cashier starts the terminal, you only need to place the phone or card about four centimeters in front of the terminal to pay. Then, transfer the card number, validity period, and amount. A beep usually indicates that the transaction completed successfully. As with traditional card transactions, this money will be deducted from your account.

In special cases, you only need to enter your PIN. Generally, for transactions up to 25 or 50 Euros, there is no need to enter a PIN. The maximum amount depends on your bank or credit card provider. Also, for security reasons, for example, if you make countless contactless payments in quick succession, sometimes you will be asked for a PIN. Since you must touch the PIN pad in this case, you should wash your hands afterwards for hygiene reasons.

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How do I know if my EC or credit card is suitable for contactless payments?

Credit and debit cards issued in the past two to three years typically have integrated NFC chips. This is indicated by the wavy symbol on the card, reminiscent of the WLAN symbol. You will find the corresponding symbol near or on the back of the cash card chip. If in doubt, ask your bank or credit card provider.

How does mobile contactless payment work?

In order to be able to pay with a mobile phone, a credit card or current card must be stored on the device in virtual form. There are many providers available for bank card virtualization. The most popular are Apple Pay and Google Pay. However, the service is not available for every smartphone and every bank. Apple only allows NFC on the iPhone to be used with Apple Pay, an internal payment service. Garmin Pay operates independently of the bank. This is made possible through cooperation with payment service provider VIMPay. The following table provides a brief overview of which bank works with which provider. Some banks also offer their own solutions.

Below you will learn how to set up Apple Pay and Google Pay on your smartphone.

Where can I pay with NFC in Germany?

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NFC is not a new technology. Radio standards have been around for almost a decade. However, in Germany, paying with NFC has been a shadow for a long time. In recent years, the situation has changed dramatically. Among other things, you can already make contactless payments at almost all large supermarkets and retailers like Media Markt, Saturn or Karstadt. However, in the bakery, kiosk or ticket machine around the corner, the possibility of contactless payment is also increasing. You can usually recognize this from the symbol in the store on the left. Otherwise, ask the retailer if they offer contactless payment. Often you will find the symbol "NFC" or the logo of a contactless payment service [such as Google Pay] on the left, rather than the symbol on the left.

How secure is the contactless payment process?

Of course, there are security issues when using NFC and mobile payments. Can you make contactless payments without hesitation, or is the new method risky? Deutsche Credit Bank, an interest group at the German credit institution, said: "The same proven high-security mechanism was used as with previous contact-based debit cards. Therefore, it said in a press release from the association.

Technically prevent obsolete accidental payments, according to the regulations of credit card provider Visa. After all, only when the card is close to the reader [four centimeters], until contactless payment at the cash register is valid. The company wrote on its website that if several cards were identified in front of the terminal, the payment process would also be cancelled.

Nevertheless, experts must be cautious. "Don't let these cards look at you," security expert Tobias Schrödel said in a 2016 blog. I think it sucks! Schrödel described the possibility of reading data from NFC-enabled credit cards. In fact, this is even possible for laymen, such as using the free Android application "Credit Card Reader".

However, in most cases, you won't get more than this number. Visible data printed on the front of a credit card. In theory, every time you pay with a credit card, these data may fall into the wrong hands. However, these are usually not enough to buy at your own expense. Most online retailers require additional information when paying with a credit card, such as the cardholder's name or a check digit on the back. In addition, according to Schrödel, there should be no "thin holster for leather wallets" between the reader and the card. Otherwise, as shown in our video, the readings will no longer work.

Although it is possible to read data over large distances using NFC, security company Kaspersky has explained this in a 2015 blog post. However, the effort here is not proportional to the output. An attacker must install a Trojan horse on your smartphone and operate a conventional cash register. This will make it easier to track down the identity of the offender.

If you still feel uncomfortable, you can get a credit card case for free from your bank, which will block the NFC signal if you keep it in your pocket. In addition, according to MasterCard, some banks will provide cards that do not have contactless features when explicitly requested.

What about security when paying with a smartphone? On the one hand, smartphones offer criminals new opportunities to attack, for example, by infecting the device with a Trojan horse. However, manufacturers and payment service providers are working on new security solutions at the same time. For example, Mastercard uses a new encryption system called MDES. This does not store the card number on the smartphone, but only the token. This is generated from the card number and linked to the selected device. For customers, this means greater security: only tokens and token expiration dates can be used for single payments, not confidential credit card information.

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At the time of payment, the token, including the expiration date, will be transferred to the cash register terminal in a standardized encrypted form. Mastercard then checks the token and authorizes the transaction. According to the provider, even if a smartphone is lost, the card number cannot be stolen in the process.