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Explainer: Have contactless payments taken off in the GCC?

Explainer: Have contactless payments taken off in the GCC?

The Covid-19 pandemic has made contactless payments more relevant than ever before. Khalid Elgibali, MENA division president at Mastercard, discusses whether adoption in the GCC grown significantly

The GCC countries have seen considerable growth in contactless payments over the years. According to Mastercard data, in 2019, the wider MEA region saw over 200 per cent growth in contactless transactions. Today, almost one in nine Mastercard transactions at point-of-sale terminals in MEA are contactless.

The pandemic has certainly accelerated adoption of contactless payments, and increased awareness around its speed and security.

Mastercard’s data for March 2020 versus last year, shows growth in contactless payments throughout the GCC, including over 100 per cent in the UAE. Contactless transactions in Saudi Arabia grew three times as fast as non-contactless transactions.

In a consumer study we conducted in April, eight in 10 respondents in MEA said they will continue using contactless payments post-pandemic, pointing to a long-term shift in behaviour.

HOW DO CONTACTLESS PAYMENT SYSTEMS WORK?
Contactless uses an embedded chip with antennae. After tapping a contactless card or device at checkout, payment details are communicated wirelessly to the terminal. If using a mobile phone, consumers receive payment confirmation moments later.

MANY CONSUMERS STILL HAVE SECURITY CONCERNS. HOW CAN THESE BE ADDRESSED?
Contactless cards are designed to meet all the essential security requirements that often worry us – from protecting against fraud, to maintaining consumer privacy, and offering a good cardholder experience. While there have been rumours that fraudsters can easily electronically pickpocket your contactless card, these fears are largely unfounded. Even if someone does get access to your contactless card, the only information they can really harvest is the account number and expiry date, which is inadequate to make any fraudulent transactions.

More importantly, they will not be able to get this information unless they are physically close to the card, specifically in a range of 0-4 centimetres. Another common misgiving is that someone can counterfeit your contactless card using the information they intercept. Again, this is extremely unlikely.

Every time a contactless payment is made, a contactless device generates a one-time-only cryptogram, which is unique to that particular transaction. This number is generated using advanced encryption methods and it is extremely difficult to duplicate this advanced technology and create a functioning counterfeit version of a contactless card. Furthermore, given the purchase limit on contactless transactions, the incentive to attempt something like this is vastly reduced.

Finally, there is the myth that fraudsters can make online or phone purchases using contactless card information. A contactless card does not send any information other than the unique code and the account number to the card reader, and an online or phone purchase requires much more information including the cardholder’s name, billing address, and the three-digit code at the back. Without these
details neither online, nor phone, nor in-person transactions can be completed.

A contactless card or device has the same security and authentication technology that is behind traditional credit and debit EMV chip cards. Moreover, with the advent of advanced technologies such as AI, financial institutions and payment companies are constantly monitoring account activity and can zero-in on potentially suspicious transactions with unprecedented speed.

All Mastercard contactless payments carry a global zero liability guarantee, which means you will not be held responsible for unauthorised transactions on your debit or credit card.

REGIONALLY, HAVE INDUSTRY PARTNERS MADE THE TRANSITION TO ENABLE CONTACTLESS PAYMENTS?
Yes, efforts by industry partners are facilitating wider contactless enablement, adoption and growth. Issuing banks are onboard, and central banks have been decisive in raising contactless payment limits – or the limit up to which a PIN is not required – for
added consumer convenience.

WHAT IS THE FUTURE OF CONTACTLESS PAYMENT? CAN WE EXPECT NEW TECHNOLOGIES TO FURTHER REVOLUTIONISE THE INDUSTRY?
Covid-19 has led to an acceleration in contactless payment and this digital transformation will continue. The MENA region is home to a youthful tech-savvy population that is constantly connected and on the go. Current spending patterns show that people in the region are turning to contactless payments to buy essentials like grocery, pharmacy and retail items, foretelling a shift in consumer behaviour that
is likely to stick.

Tapping is deeply engrained in many markets, thanks to the growth of tap-and-go at transit turnstiles. This has led cardholders to adopt contactless wherever speed and convenience is key – with small, everyday purchases such as groceries, fast food, and vending machines, accelerating the shift from cash to card.

While it’s exciting to see the impetus for contactless right now, it’s also the result of investments, innovation and collaboration over a long period of time.

The technology that will revolutionise the industry in future, might already be in its infancy today.

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