Contactless payments are becoming the norm in Australia, with phone and smart watch payments commonly replacing plastic credit cards. But is paying with Apple Pay, Google Pay or Samsung Pay really safer than tapping your credit card?
Both methods are convenient and protected by Australian consumer law, but one offers an extra layer of defence against fraud and data theft. Here’s how they compare.
Fraud protection
Australia’s ePayments Code, regulated by ASIC, covers both credit cards and digital wallets. The Mastercard, Visa, and American Express card networks also offer user protection. This means you’re not liable for unauthorised transactions unless you’ve acted negligently – by sharing your card’s PIN or phone’s passcode, for example, or by failing to report a lost card.
Most banks practise uninterrupted fraud monitoring, reducing the likelihood of criminal activity. However if you do see a fraudulent transaction, in most cases, you will be able to temporarily block your card using online banking. Then you can request a chargeback, and follow your bank’s advice about whether your card needs to be replaced.
Digital wallets have exactly the same legal protection, but with the added built-in security features of encryption, tokenisation (replacing your card details with a one-time code) and the option of biometric verification, such as a fingerprint or facial recognition.
Data and transaction security
When you pay with a physical card, your card number is shared with the merchant’s system. If that system is hacked, your details could be exposed.
Digital wallets don’t share your actual card number. Instead, they use tokenisation. The merchant never sees your card number, so your data remains safe even if their system is compromised.
Physical safety and convenience
You can easily lose your credit card, or it can be stolen. Its details can also be copied using a skimmer. But if the same thing happens to your phone or watch, the added security of a passcode or biometric verification makes it much harder for anyone else to use your digital wallet.
Backing from Australian banks
Most Australian banks support Apple Pay, Google Pay and Samsung Pay. They provide real-time transaction notifications, instant card freezing or replacement online or in-app, and the 24/7 fraud detection and security already discussed.
Acceptance in Australia and overseas
While contactless payments are available almost everywhere in Australian cities and large towns, businesses in some regional and remote areas may have older EFTPOS equipment. If you’re travelling to these places, it would be a good idea to make sure you have your plastic card just in case. When travelling overseas you are even more likely to need to carry your physical card as a backup.
The bottom line
Digital wallets generally offer better protection and security than physical credit cards in Australia.
However, it’s a good idea to carry a physical backup card, to cover the possibility that mobile payments aren’t available or your phone runs out of battery.
If you’d like more information about using a digital wallet, online banking or banking apps, get in touch with one of our professional advisers. They’ll explain everything you need to know.
