Contactless Credit Cards and Your Tap-To-Pay Future

Contactless Credit Cards - hero

 

Contactless credit cards let you “tap” to pay. Transactions are quick and easy! The technology is becoming more and more common in the U.S. as big-name American issuers move toward offering contactless cards. 

 

How Do Contactless Credit Cards Work?

The cards use a contactless technology called NFC (near field communication). Each card has a contactless NFC chip and radio frequency (RFID) antenna, which is why they’re sometimes called RFID credit cards or RFID chip credit cards, too. Contactless credit and debit cards use a combination of traditional EMV chips (the same ones that are in your new “chip” cards), along with a contactless chip and RFID antenna. To communicate, the card and the retailer’s card reader have to be within 4 to 10 centimeters of each other.

Using a contactless card is easy–you simply wave it over the terminal. Your card uses radio frequencies and a one-time code to complete the transaction. There’s no need to swipe, sign, or dip. The whole tap-and-go process takes a few seconds, making it infinitely faster than EMV chip cards. A transaction that might take 30 seconds by inserting an EMV chip only takes an average of 15 seconds when you tap-to-pay. That’s why contactless cards are perfect for speedy transactions, like picking up your morning coffee.

 

Forget Your Wallet? If You’ve Got Your Phone, No Problem!

In addition to toting your card around as usual, you can use a digital wallet. A digital wallet (or “e-Wallet”) is an electronic device (like your smartphone) or online service that allows you to make electronic transactions. This can include purchasing items online with a computer or using a smartphone to purchase something at a store. With digital wallets, the smartphone contains a pair of chips. One accesses and encrypts the card information, and a second near-field communication chip transmits the card data to complete the transaction. The information that you upload to a mobile wallet gets encrypted, potentially making it safer than carrying physical cards with you.

If you do your shopping on the same device on which you keep your digital wallet, you can also use it for online or in-app payments. Plus, you’re streamlining the amount of items you’re carrying around on a daily basis. There’s something to be said for the joys of simplicity.

 

Are Contactless Transactions Secure?

A common misconception about NFC payment technology is that it’s easy for thieves to steal your credit card information by getting close to your card with a reader. The reality is that contactless payments are just as secure as if you insert your chip into a reader. Each transaction produces a one-time code rather than the same info being sent each time you pay. This means someone wouldn’t be able to steal your card information for future transactions even if they got close enough to your card with a reader. Finally, most issuers set limits on contactless card transactions—usually around $50 to $100. After you hit that amount, a signature would be required for the purchase.

Here are a few tips for maximizing safety when you switch to contactless:

Switch to an RFID-blocking wallet.

They’re available everywhere and don’t look or feel any different than your current wallet. The risk of getting scammed by an RFID skimmer is up for debate (many experts say skimming is a waste of time compared to purchasing credit card numbers in bulk online) but you’ll be covered, just in case. Alternatively, you can get the same effect by wrapping your card in good old aluminum foil. 

Use all the locks your device and apps offer. 

These features include Apple iPhone’s touch ID and PIN codes that can keep your phone secure when you’re not using it.

Set up notifications for all the cards you put in your digital wallet. 

Most card issuers allow you to set alerts that will send a text or email when your card is used in certain ways.

Use credit cards, not debit cards. 

If your account were compromised you’d only be waiting for the card issuer to restore a line of credit. If your checking account were compromised, you’d be waiting on the missing cash to be restored. (U.S. law says you can’t be held liable for unauthorized transactions that occur after you report the loss of your ATM or debit card.)

Use anti-malware on your phone.

Also, consider technology that lets you wipe it remotely if it’s lost or stolen.

Regardless of how you use your card, monitor its activity.

The vast majority of credit cards, including tap credit cards, have a zero-liability guarantee. Just be sure to check your monthly statements and credit reports. As always, alert your issuer if you spot any unrecognized purchases.

 

So, Are Contactless Transactions The Future?

There are multiple reasons why the U.S. has been behind the curve on adopting contactless payments. U.S. retailers have been slow to switch their point-of-sale terminals and hardware to accept them. However, as mobile payment options have become more popular, retailers are upgrading their systems to accommodate contactless payments. As more Americans recognize the benefits of using both mobile wallets and contactless cards, more issuers are rolling out more cards with contactless capabilities. You can probably expect to have a shiny new contactless credit card in your wallet somewhere down the line. Have no fear! Your financial professionals are ready and waiting to answer any questions and concerns you may have about your tap-to-pay future.