What are the benefits of contactless payments

Advantages and disadvantages: This is how contactless payment works

How does contactless payment work?

Contactless payment works with special EC cards, credit cards or smartphones. EC and credit cards must be equipped with microchips that can save payment data and transmit them to scanners at cash registers. Smartphones must be equipped with SIM cards that support so-called near field communication (NFC).

Cards for contactless payment have to be topped up with credit, and payments are debited from accounts. Sometimes consumers have to enter a PIN when making contactless payments, sometimes they have to sign it, and sometimes they just have to put on the card. In some cases, payments are only possible up to a certain amount.

Which cellular or financial providers enable contactless payment?

Contactless payment with the "girogo" service is possible at savings banks and banks. The function is free of charge and automatically integrated into all new EC cards from the savings banks. Some Volksbanks are also participating - currently in the Hanover, Wolfsburg and Braunschweig areas. In order to be able to pay with "girogo", customers first have to top up their card. A maximum of 200 euros is possible.

All three major mobile phone providers, Deutsche Telekom, Telefónica with O2 and E-Plus and Vodafone offer so-called wallet apps. Users can download it to their NFC smartphone and then use it to pay. The US IT group Apple will soon also be launching its digital payment service Apple Pay in Europe - but initially only in Great Britain. Competitor Google also has its own payment service with Android Pay. For the time being, payments can only be made in the USA.

Where is contactless payment already possible in Germany?

The Handelsverband Deutschland (HDE) estimates that there are around 50,000 checkout terminals in Germany at which contactless payment is possible. In April, network providers and retailers in Berlin started the "NFC City Berlin" initiative. Around 2000 NFC terminals were installed in the Kaufhof, Obi, Real, Rewe, Penny and Kaisers branches. Around two years ago, Edeka launched its own contactless payment service for the same region. Since Tuesday, Aldi Nord has also been able to make contactless payments by smartphone and Visa Maestro or V-Pay debit card.

What are the benefits and potential dangers?

Business argues that the contactless service will make in-store payments faster and more convenient. From the point of view of consumer advocates, however, the risks should not be underestimated: With cash in the wallet, consumers can - depending on their habits - keep an overview more easily. In addition, if the card or cell phone is lost or stolen, there is a risk that strangers can go shopping until it is blocked - even if only for smaller amounts.

IT experts also warn of the dangers of future smartphone viruses. Already in the past there were warnings that NFC chips could be read by unauthorized persons at a short distance of a few centimeters.

What are the interests of business?

According to consumer advocates, the economy expects contactless payment to make consumers spend more lightheartedly. In addition, there is less money in the tills in the shops. Banks could, in principle, consider installing fewer ATMs if the service catches on.