By Jeremy Nicholds, CEO, Judopay,
Over the past few weeks, while the UK has been in lockdown due to COVID-19, we’ve seen the retail industry undergo change at an incredible pace, with the great majority of businesses taking steps to protect both customers and staff. Consequently, we’ve had to alter the way we shop and pay for goods.
As part of this change, we’ve witnessed banks and card schemes adjust the contactless payment limit from £30 to £45 to encourage people to use the payment method, prevent unnecessary contact and reduce the COVID-19 contagion risk. It’s a trend that we’ll likely see adopted across the entire globe before the virus subsides.
What, then, are the pros and cons of increased contactless payments and what other measures can we take to further prevent the virus spreading, such as alternative payment methods (APMs)?
Preventing the spread of COVID-19 with contactless payments
Before we had contactless payments, aside from markets which were still magstripe based, the only option people had when it came to in-store card payments was to insert their card in a PIN pad and enter their PIN. The issue with this approach during the current pandemic is that you don’t know who’s touched the PIN pad before you.
An even less hygienic option is handling cash. Passing it from person-to-person is guaranteed to spread germs throughout the entire population, putting retail staff and customers in danger. What’s more, like using a PIN pad, we don’t know who’s been at an ATM before us.
Thankfully we have the option to use contactless payments today, which is a lot more hygienic, faster and more efficient than both Chip and PIN and cash payments. With retailers and banks pushing for the use of this payment method, and stores selling unessential goods closing across the country, we have seen cash usage fall by more than half since the UK went into lockdown.
Yet, in those stores that remain open, such as supermarkets and off licences, we need to ensure that we continue to slow the spread of the virus using payment methods that reduce unnecessary contact.
Are APMs an even better approach?
A problem with contactless card payments lies in the lack of cardholder authentication and this becomes more important when increasing the contactless limit. Without the need to authenticate a contactless payment, stolen cards can be used to make purchases without requiring a PIN and so more of an individual’s funds are potentially exposed now the limit has increased.
Still, there are measures in place to prevent excessive amounts of money from being stolen from people using the payment method, such as the need to enter your PIN on ‘one in five’ consecutive contactless payments. The amount of payments that can be made before a PIN is required varies dependent on the issuer, however, in the case of ‘one in five’, goods worth £180 could be bought before the payment is even blocked and this restriction means that customers are back at square one –touching a PIN pad.
A better way of approaching contactless payments would be to use an eWallet, such as Apple Pay or Google Pay. When it comes to such payment methods, they have a number of layers of security that make payments faster and safer.
For example, when you load your card into ApplePay, the card details are tokenised for that device only and loaded into a secure, encrypted element on your phone, similar to the chip on a card. This means that while the payment details are stored on a mobile device, they are saved as a token and encrypted so that if the device is stolen, the details are inaccessible and not useable on another device.
Further bolstering this security is the fact that at the point of sale, these apps require biometric authentication such as a fingerprint or facial recognition. Therefore, it’s practically impossible for a payment to be made from a stolen device.
When all these safety elements are combined, it means that there’s no need for any payment limits or restrictions. The apps themselves are secure enough and as a result, customers won’t need to touch a PIN pad at all. What’s more, they are directly in control of the hygiene of their devices and can regularly wipe them down, while ensuring that other people aren’t handling them.
What other hygienic payment methods are available for customers?
There are plenty of other ways to pay for goods that are secure, hygienic and fast. For example, Yoyo Wallet tokenises payment details and uses a QR code so that customers can make contactless payments simply by scanning the code at the checkout. These payments can be faster than contactless card payments with some well-established eWallets even having loyalty and reward features.
In addition, with the country in lockdown, many people are turning to digital payments and are shopping online. This is the clearest way to reduce the spread of the virus as you don’t even have to leave your own home. Yet, online payments shouldn’t be long and drawn out– if they are it can result in the loss of the customer’s attention and conversions.
Instead, by storing and tokenising payment details, retailers can allow customers to make repeat transactions without re-entering their details over and over. Another safe approach would be to use Pay by Link solutions, where the customer is sent a secure page where they can finalise the payment.
COVID-19’s implications for the future of payments
Even before the outbreak of COVID-19, the UK was moving towards becoming a cashless society– though I do believe that cash will continue to play a role, even when the majority of people have gone completely cashless. I myself haven’t used cash for well over a year now across several continents, and rarely use plastic either –opting to use APMs instead. I’ve found that this has brought new levels of ease to my shopping experience.
It is this level of ease that may instigate change during the COVID-19 outbreak and will contribute to preventing its spread. Increasing the contactless limit is a good first step, though there are a great number of people nervous about adopting the technology. Once they have recognised the safety and convenience of contactless payments and APMs, we will likely see long-term changes, such as decreased usage of cash and Chip and PIN, which will make the way we pay more hygienic for the foreseeable future.