A weekend stroll in the city, a long queue at the cash desk: Finding the wallet in your handbag now, counting the cash to match or waiting for the EC device to connect takes time. But the traditional payment methods are getting faster and faster competition. Cashless payment by mobile phone is now also on the rise in UK. We have summarized everything about the new possibilities and security issues surrounding contactless payment in this blog article for you.

How does payment by smartphone work?

How your own mobile phone becomes a digital wallet is in principle comparable for all providers: A credit card is stored in the payment or banking app of the smartphone. Then the NFC function must be activated on the mobile phone and you are ready to go. To pay at the checkout, simply hold your mobile phone up to the corresponding reader. The data is exchanged automatically and encrypted between the devices within seconds. Depending on the default settings, the amount to be paid is posted directly from the current account by direct debit or deducted from a pre-paid account within the app. Among the most popular and therefore best-known payment apps are Google Pay, Samsung Pay and Apple Pay, which has been available in UK since November 2018. The Volksbanken Raiffeisenbanken also offer a contactless payment option using a smartphone.

More about NFC technology

Another possibility is to pay with QR payment code. Here the payment app generates a barcode or QR code which can be scanned at the cash register. After decoding the code, the amount due is debited from the account using the stored payment data.

What are the advantages of paying with a smartphone?

Even if paying with a smartphone still seems strange to many, it has many advantages. Instead of lengthy payment processes with the EC card or too little cash for the new favourite item, the smartphone is fast and reliable. A short walk to the reader and the transaction is completed. For amounts up to 50 GBP, not even the PIN is required. An Internet connection is also not required during the payment process. The phone reloads all important data as soon as it is online again.

The user is not only technically protected against data misuse: Since January 2018, a new EU directive (PSD2 = Payment Service Directive) has further strengthened consumer rights. In the event of fraud, users only have to pay up to 50 GBP. If it can be proven not to have noticed the fraud, not at all.  However, this does not always apply, e.g. if the injured party has grossly negligently breached his or her duty of care. A further legal advantage arises in relation to the guarantee in relation to cash payment. The seller has to pay for defects in the goods for two years, but only if the purchase can be proven. Especially with smaller investments, the sales slip is quickly thrown away or the receipt is lost. As a mobile payment payer, you still have another proof in your hand with your bank statement.

The new technology can usually be used without much effort and fees. After consultation with your own bank, all you have to do is activate the NFC function on your mobile phone. Almost all modern smartphones are now equipped with an NFC chip. However, a possible retrofitting is also no problem. Simply attach an “NFC sticker” to the back of the mobile phone and you are ready to go.

And even if, as in the case of Apple Pay, only a few banks offer the payment app so far, a setup may well be worthwhile in the future. Because new points of acceptance are added almost daily. In addition to the large supermarket chains, you can already use your own mobile phone to pay at several department stores.

What are the disadvantages of paying by mobile phone?

In order to be able to use the technology, some requirements must be met. First of all, you need an NFC-enabled smartphone. In addition, your bank must offer a compatible credit card that can be “deposited” on your mobile phone. Also, despite the large number of NFC-capable POS devices, difficulties are to be expected, especially in the countryside and at the bakery around the corner. And so the new payment method is often described as not yet suitable for everyday use. However, every second checkout in UK is already equipped with the new technology. Now that payment by smartphone is already possible at larger retail chains, an expansion to smaller retailers and grocery stores is foreseeable.

 How secure is the new payment method?

In the meantime, a high security standard is guaranteed with NFC transmission. The encryption is highly complex and on a banking level, similar to a contactless credit card payment. Another security factor is the short distance between the devices during the payment process. This makes it extremely difficult for fraudsters to interfere with the transaction. This also prevents the unintentional initiation of a payment.

Despite all security standards and advantages, general caution is essential when making mobile payments. Regular checks of bank statements and statements of account are therefore also an absolute must.