Home Banking What Is Contactless Payment And How Does Contactless Cards Work?

What Is Contactless Payment And How Does Contactless Cards Work?

how do contactless cards work
Photo by Olya Kobruseva

Contactless payment is a way to pay in stores that doesn’t require cash or even swipe a card. At the checkout, all one needs to do is tap or hold one’s contactless card or smartphone close to a reader that works with it. The terminal will connect to your bank account automatically, and the payment will be made in a few seconds. You do this with contactless cards. But how do contactless cards work?

How Do Contactless Cards Work?

A contactless device or contactless debit or credit card that can be used without the card touching the card reader. Most of the time, that means you won’t have to touch a card reader, but you might have to enter your PIN from time to time. This could happen for safety reasons or to make sure that transactions that exceed a certain amount are real and done by you.

Most card issuers will also ask you to do a typical chip-and-PIN transaction first before turning on the contactless payment technology.

If you’re curious and wondering, how do contactless cards work in terms of technology? Radio frequency identification (RFID) technology is used in contactless cards. This makes it possible for the card to communicate with the card reader when it is held close to the reader during the transaction.

But, how do contactless cards work if the store doesn’t accept contactless payments? In addition to the usual debit or credit card number, CVV or security code, expiration date, and magnetic stripe, contactless cards usually have an EMV chip. This gives users of these types of contactless credit cards more choices at checkout. If a store doesn’t have or use a contactless reader, you are still able to use the chip reader or swipe your card.

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When you put your contactless card near the contactless reader, it verifies your card information in a secure way. The transaction is then sent to the card issuer by the point-of-sale system at the store. The issuer then looks at the transaction and decides whether or not to approve it.

You might think these are a lot of steps, but this tap-and-go process usually doesn’t take more than a second, and it is faster than inserting or swiping a chip card and much faster than using cash.

The following are examples of contactless devices:

  • Debit, credit or pre-paid cards.
  • Mobile devices like tablets and smartphones (those which use mobile payment systems like Google Pay, Apple Pay, or Samsung Pay).
  • Key fobs.
  • Wearables like watches and wristbands.
  • Stickers.

It’s pertinent to note that mobile payment devices usually don’t have a payment limit since they involve an extra level of identification, like a PIN, face scan, or fingerprint.

How To Use a Contactless Credit Card Or Debit Card

Payments made with contactless credit cards are the same whether you use Visa®, Mastercard®, American Express, or another contactless card issuer. Here’s how to use contactless credit or debit cards:

Look for a symbol on the card reader that says “contactless.” This could be some four curved lines on your card, and these curves should also be on card readers that can read contactless cards.

When prompted, hold your contactless card or device about one to two inches away from the contactless symbol.

If the purchase is approved, you’ll hear a beep, see a green light, or see a check mark.

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Once you familiarize yourself with how to use contactless credit cards, making a payment takes only a few seconds.

Which Side of The Card Is for Contactless?

If your debit or credit card has the contactless symbol on the front or back, or if your mobile device is contactless enabled, you can hover the card or device over the contactless symbol to pay at many of your favorite stores where you see the contactless symbol.

Pros And Cons Of Paying With Contactless Credit Cards Or Devices?


  • Convenience: You just have to tap your card or phone, and you don’t have to enter a PIN or sign a receipt. This will save you time and won’t cost you anything extra.
  • Peace of mind: You’re safe from fraudulent transactions, and stores can no longer see your credit card information.
  • Makes hackers less of a threat: Most of the time, hackers can scan your card to get valuable information, but the NFC technology encrypts sensitive information when sending it.
  • No more typing errors. On contactless terminals, you don’t have to worry about typing in your PIN wrongly, and the speed of the transaction is impressive.
  • Easy to use Abroad: You can use your contactless payment methods abroad if the store allows it, but the maximum amount you can spend may change based on the local laws and currency. Be aware that there may still be fees for foreign transactions.
  • Shorter queues: Since the transactions are quick and convenient, this payment method means fewer queues at checkouts.

The Cons Or Dangers Of Contactless Cards.

  • Risk of loss: If you end up losing your credit card, someone could use it to get into your account.
  • Spending is easy to lose track of: When all you have to do to spend money is hover or tap, you don’t always get a receipt. Make sure to check your bank statement often to look for mistakes or suspicious transactions.
  • Attack: There is a chance that spyware, malware, and other viruses will attack. The payment terminal could get a virus just like any other computer device.
  • Limits: There are limits. You can’t choose or change your maximum spending limit. Your bank decides this.
  • Clarity issues: Bank statements may be confusing. Some stores may do business under a different name, which could make transactions on your bank statement look strange and confusing.
  • Your credit score If you have bad credit, your institution may not be willing to give you a contactless card.
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So, if you ever wondered or asked, how do contactless cards work? We hope you have learnt a thing or two from this article.



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