What is contactless payment?
You’ve probably heard the buzz term “contactless payment” a lot lately, and you might be wondering what the big deal is. Basically, the term can refer to the blanket definition of payments ranging from online credit card use to in-person payments at a brick-and-mortar store. And, as the term suggests, it doesn’t require any physical contact. Although the technology behind it might be somewhat complex, from a consumer’s perspective, contactless payment is really quite simple and very convenient. Contactless payment options include plastic credit/debit cards, mobile apps, and digital wallets (such as Apple Pay, Google Pay, and Samsung Pay).
What you should know about contactless cards
Most consumers who use credit or debit cards either already have or will soon have “tap to pay” technology associated with all of their physical cards. These enhanced cards will still offer EMV®-enabled technology as well as a magnetic strip. And while contactless cards may look similar to older ones, they’re enabled with a type of “antenna” that helps the card communicate with the right sort of reader. So consumers can simply tap or wave the card above the icon on the reader at the point of sale to transmit their payment information and complete their transaction.
How contactless cards work
Contactless cards are built with a chip that creates a one-use code for each transaction. This code contains all of the payment information and is transmitted through radio frequency identification (RFID) or near-field communication technology. As long as the card is close enough to the reader (within about two inches), the information should transfer, all without touch.
The benefits of contactless payments
Contactless payments offer numerous benefits, particularly in contrast with the old-school magnetic strip cards. For one, the overall checkout process is faster, because consumers don’t have to swipe or insert their cards (a PIN may still be required at certain merchants for security reasons), which typically takes only seconds to complete. The cards themselves last longer because, without the swiping or inserting, the technology isn’t scraped off, scratched, or scuffed. Finally, because they don’t have to have contact with the reader or keypad, consumers can enjoy a more hygienic experience (a consideration for many consumers since the Covid-19 pandemic).
Is a contactless payment safe?
Compared to old magnetic strip cards, contactless cards offer a greater level of security (the whole transaction is encrypted). While the chip on contactless payment cards creates a new and encrypted code for each use so that it’s difficult to reproduce, magnetic strips have a digital key that’s sticks with the card and includes the owner’s account number, verification code, and other information. The strips transmit all of that information on every transaction, which means that they can more easily succumb to theft through duplication, via skimming or other methods. That said, without the second authentication layer of a PIN, these cards are easy for criminals to use if they can get hold of them. That means that consumers must be vigilant about maintaining their cards and must be sure to freeze their accounts if their cards are lost or stolen.
Convenient, Safe, Efficient
There’s a reason contactless cards are becoming the standard for payments, both for merchants and for banking institutions like Bellco Credit Union: they provide a smoother customer experience. They are easy to use, safe, and reliable. For more information, be sure to check out bellco.org/personal/digital-banking/digital-wallet.
EMV is a registered trademark owned by EMVCo, LLC.
