Contactless Transaction
A contactless transaction refers to a wireless financial transaction in which a customer makes a purchase by moving a security token, such as a credit card or smartphone, in close proximity to the vendors point of sale (POS) reader. This method uses radio-frequency identification (RFID) or near-field communication (NFC) technology to enable secure payments without the need for physical contact between the payment device and the reader. Contactless payments are known for their speed, convenience, and security, as they do not require the sharing of billing or payment information directly with the vendor, and each purchase is tokenized with a one-time transaction number, making it difficult for attackers to intercept sensitive information. Major financial institutions and multinational corporations offer contactless payment systems, and the technology has gained popularity in various countries, including the U.S., U.K., Japan, Germany, Canada, and Australia. Contactless payments are typically limited to small value sales due to the lack of signature or PIN verification, but they are becoming increasingly prevalent, with some statistics indicating that they made up around 19% of transactions in the UK in 2018. As the technology continues to evolve, contactless payments are expected to become more widespread and integrated into various industries, including retail, hospitality, and transportation.
