Tapping to pay with your credit card has become increasingly common, and in the process, it’s made payment processing easier for customers and merchants alike.
Contactless credit cards, or cards that can complete transactions without swiping or inserting plastic, have seen a slow adoption across the United States compared to countries like the United Kingdom and Australia — despite being first introduced into the U.S. by Mastercard with MasterCard® PayPass™ in 2005.
Experts believe the U.S. is heading toward an increase in contactless card adoption. With this technology comes distinct security implications compared to more traditional credit cards.
We took a look at how contactless payment methods can keep your card information safer than you might think.
Contactless payments vs. contactless cards
Contactless payments use near field communication technology, also known as NFC, to connect to a payment terminal and complete a transaction. When completing a purchase, information is transferred with the help of a built-in contactless chip and radio frequency antenna.
Through tokenization, a random sequence of alphanumeric characters takes the place of credit card numbers, adding an extra layer of security to card transactions.
Contactless credit cards, in particular, use the same technology as EMV chip cards. Similar to tokenization, contactless cards produce a one-time cryptographic code that masks your card information and allows for a secure transaction.
What are Contactless Cards?
Contactless cards are credit cards capable of completing a transaction without being swiped or inserted into a card reader using radio-frequency identification (RFID) technology. Cardholders are able to make purchases by simply tapping their card on the payment terminal.
The perks of contactless cards
A contactless transaction typically takes between one and two seconds to complete, while traditional cards can take around 10 seconds to process.
“The merchants definitely benefit [from contactless] in terms of being able to improve their customer experience and drive additional revenue,” says Dan Lyman, Head of Fintech Payments for North America at Transaction Network Services, in his own opinion.
“The consumers benefit by having a faster way of making a transaction, and it’s more convenient than standing there for eight or 10 seconds while the transaction gets approved.”
Contactless adoption worldwide
In a recent survey by Transaction Network Services, 60 percent of survey respondents based in the United States made an average of one contactless payment per week, whereas 75 percent of Australians and 79 percent of Britons completed the same.
Lyman presumes that the U.S.’ slow acceptance of contactless payment methods stems from its more fragmented market.
“Anything that requires collaboration and standardization takes longer than it does in other markets… it’s much easier to drive change [abroad],” says Lyman.
How contactless cards prevent fraud
Contactless cards use the same technology as EMV Chip Cards, meaning your transactions will be just as safe.
The very nature of contactless cards prevents the theft of financial information — namely, a thief must be within two to three inches of your card in order to intercept the information.
Although contactless cards are one of the safest options for making purchases on a credit card, not much can be done to protect your credit card information if your card is stolen.
Thankfully, many issuers offer theft protection. For example, the Chase Freedom Unlimited® — a contactless card option — offers real-time fraud monitoring and alerts should your card be compromised.
Chase will notify you by text message or email if they detect any fraudulent activity. Should an unauthorized transaction be made with your card, Chase’s zero liability protection ensures that you won’t be held accountable for the purchases.
The bottom line
The future is contactless, and as far as safety is concerned, your information is just as safe with a contactless credit card.
For more information on how cardholders are using their contactless cards, read credit card industry analyst Ted Rossman’s piece on using a contactless card on the New York City subway.
This article has been corrected to show the difference in technology between contactless payments and contactless credit cards.