What is a Contactless Credit Card and how do they work?

A contactless card, also known as a “tap-to-pay” card, is a type of payment card equipped with near-field communication (NFC) technology. Contactless cards are designed to make transactions faster and more convenient by allowing cardholders to make payments by simply tapping or waving their card near a compatible payment terminal, without physically inserting the card into a card reader or swiping it through a magnetic stripe reader.

The NFC chip on your card transmits the necessary payment information to the payment terminal. This information includes the card number, a one-time code, and other transaction details the bank needs to authenticate and execute the transaction.

Contactless cards were introduced to address several needs of both consumers and merchants. These included speed and convenience as well as reduced contact. Additionally, these cards have gained widespread acceptance worldwide, allowing travelers to use their cards internationally.

How to know if your credit card is contactless

To determine if your credit card is contactless, look for the contactless symbol on either the front or back of the card. This symbol has four curved lines resembling radio waves. If you’re still unsure, you can test it at a contactless payment terminal the next time you make a purchase. If your card is contactless, it should work when you tap or wave it near the terminal.

How to use a contactless credit card

Using a contactless credit card to make a purchase can be simple and convenient, especially for small, everyday purchases. Here are the steps:

1. Look for the symbol: Find the contactless symbol at the checkout terminal.
2. Tap or wave the card: Simply tap or wave your contactless card on or near the checkout terminal.
3. Wait for confirmation: After your transaction is processed, you may see a message on the terminal’s display or hear a beep to indicate that the transaction was successful. This usually takes only a few seconds.

How do contactless credit cards work?

• Transactions are encrypted: Just like with a chip card, each transaction is accompanied by a one-time encrypted security code that dynamically authenticates your payment information.
• Must be close to terminal: You can’t pay accidentally – your card must be within 1-2 inches of the terminal for the transaction to occur (and you won’t be billed twice, even if you accidentally tap twice).

It’s always a good idea to protect your contactless card like any other credit card. Store it securely in your wallet or home. You’ll also want to monitor your credit card statements regularly to ensure there are no unauthorized or suspicious transactions.

What are the advantages and disadvantages of contactless credit cards?

Contactless credit cards may have several advantages and disadvantages to consider. Here’s a breakdown.

Potential advantages of contactless credit cards

• Speed: Contactless payments allow for quick transactions that could reduce checkout time.
• Ease of use: Contactless cards don’t require additional steps such as selecting payment choices from a pin pad or entering a pin number.
• Less wear-and-tear: Cards without this technology have magnetic strips and EMV chips that can wear out after extended use inserting them into terminals, swiping them through readers and handling them with dirty hands.
• Reduced contact with public surfaces: These cards provide a touchless alternative that reduces the need for physical contact with public surfaces. This could be particularly helpful where there are public health concerns such as during flu season.
• Widespread adoption: Contactless terminals have been widely adopted by many businesses and merchants in the United States. This is also the case in many countries across the world, making your contactless card a potential option if you’re traveling internationally.

Disadvantages of contactless credit cards

• Transaction limit: Contactless payments may have a transaction limit, which can vary. For larger purchases, you may still need to use a card with a chip or magnetic stripe.
• Accidental charges: Some people worry about accidentally making payments if they walk near a payment terminal or if there are multiple contactless cards within a close proximity of each other. While this is extremely rare, it’s a possibility you could unintentionally initiate a transaction.

Chase credits cards that have a contactless payment feature

Virtually all Chase credit cards are contactless.

In summary

Contactless credit cards have transformed the way we make payments by offering speed and convenience. Known for their ease of use, these cards have become increasingly popular for everyday purchases like daily stops to the coffee shop, grocery store or takeout. You may already have one in your wallet today, but if not, contact your credit card issuer to inquire about receiving a contactless replacement for your chip card.