Experts agree that contactless payments are here to stay. This payment method is powered by NFC technology, with NFC being the abbreviated form of near field communication. This technology enables the wireless transmission of payment-relevant information across a distance of several centimeters.
Contactless transactions via debit card, credit card or NFC-enabled mobile devices do not require PIN or signature authentication. The time saved, although minimal, provides value to many merchants and customers.
NFC credit cards soon to be the standard
Contactless payments are gaining popularity in Switzerland as well. More than 2 million NFC-enabled credit cards are already in circulation. NFC capable cards can be identified by the contactless icon showing a series of 4 radio waves.
Bit by bit, all Swiss credit cards are being fitted with the new technology, with some issuers making the shift more enthusiastically than others. Cembra Money Bank credit cards went contactless in 2014, Cornèrcard cards in 2015, and UBS, PostFinance, Swisscard, Bonuscard and Viseca in 2016.
PIN-free transactions of up to 40 francs
NFC-capable credit cards can now be used to pay at many big-name retailers, including Migros, McDonalds, Starbucks, Ikea and Valora kiosks. Swiss retailer Migros claims that more than 20 percent of the credit card payments at its stores are contact-free, with up to 40 percent of credit card transactions at self-check-out terminals using NFC. The trend is on an incline. However, contactless payments are still limited to a maximum of 40 francs.
NFC-enabled Swiss debit cards
A real break-through of contactless payments in Switzerland would require the implementation of contactless debit cards, such as Maestro cards issued by banks and PostFinance cards. Currently, NFC technology has only been widely fitted in Swiss credit cards.
The Hypothekarbank Lenzburg was the first Swiss bank to issue a contactless debit card. But other banks are joining the band wagon. PostFinance cards went contactless in the summer of 2015. Other big banks like Credit Suisse and ZKB are issuing contactless debit cards as of 2016.
Using mobile wallets in Switzerland
Around 1 million NFC-capable smartphones are used in Switzerland. However, actual use of phones for contactless payments is negligible. The launch of Apple Pay in Switzerland has increased market awareness of mobile wallets.
Using contactless payments securely
The growing availability of this new payment method also brings a whole new set of risks. Security experts criticize the technology on account of its known security loopholes. Data thieves can easily access contactless cards using fairly rudimentary equipment such as radio card scanners or software installed on an NFC-enabled smartphone.
Data which can be accessed in this way includes your credit card number, your card’s expiry date, and (in the case of Visa cards) your name. The 3-digit card verification value (CVV) number is not available through NFC channels.
Data theft: up close and personal
From what is widely known thus far, NFC cards can only be accessed from a very close range. Average smartphones equipped with NFC technology must be no more than 4 centimeters from the NFC-reading device. An obstruction, such as a wallet or fabric, can reduce this range even further. However, sophisticated NFC-scanning equipment can connect with NFC-enabled devices from up to 20 centimeters away.
Public transportation, restaurants, shopping centers and busy streets provide the perfect close-range opportunities for data thieves to skim data or charge contactless transactions to your NFC card without being discovered. Once criminals have accessed your card information, they can use it to perform card-not-present (CNP) transactions online.
Not all online stores require that you enter the CVV number in addition to the card number, cardholder name and expiry date. Amazon.com, for example, does not require a CVV code. It is unlikely that purchases will be made to merchants which do require a CVV code, but due to the limited possibilities of 3-digit combinations, they are in fact possible.
Card theft risk
A major risk you run when you use an NFC card is fraudulent use in the event of theft. Because contactless transactions can be made without a PIN or signature, a person who steals or finds your card can use it to make multiple transactions of up to 40 francs per transaction. Some credit card issuers aim to minimize this risk by requesting a PIN when contactless payments do not match typical cardholder behavior.
Report fraudulent use immediately
Important to know: In Switzerland, card issuers generally take responsibility for fraudulent transactions performed by a third party. But this only applies as long as you can show that you exercised due diligence in caring for your card. As long as you report the incident promptly and take precautions to protect your account from fraudulent use, you will not normally be held liable for fraudulent transactions.
Always report a lost card or suspicious account activity as quickly as possible and have your account frozen until the problem is solved.
Protective casing for NFC-enabled cards
In the future it may be difficult or nearly impossible to obtain a debit or credit card that is not NFC enabled. The majority of credit cards will be fitted with contactless technology in the future, but there may be exceptions. For example, the UBS Basic Card and the UBS MasterCard Gold International are not earmarked for NFC technology at this point in time.
If you prefer to stay on the safe side, you can carry your card in a radio-safe wallet or card sleeve. Protective encasements, such as the NFC/RFID safe cases from Swiss company Swicure, help deter NFC-scanning devices and can protect your cards from wireless attacks.
The moneyland.ch team