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FinTech
4 minutes read

Understanding the Tech that Enables Contactless Credit Card Payments

By Robert Kazmi
By Robert Kazmi
FinTech
4 minutes read

You are not alone if you want a better understanding of the tech that enables contactless credit card payments. Contactless credit card payments have transformed the customer experience for traditional retail businesses. In addition, contactless payments have driven the development of mobile app wallets that allow users to store all their card information on their phones and make payments using their smartphones. 

However, it is not just traditional retail being transformed by contactless credit card payments. With new mobile app wallets, users can quickly and securely make payments on eCommerce apps and websites with a simple click of a button. This post will explore the tech that enables contactless payments in greater detail. 

How Do Contactless Credit Card Payments Work? 

Whether you use a credit card or your smartphone to make payments, two critical technologies enable contactless payments, NFC and RFID. These technologies have been widely available for years but were seldomly used by consumers in the United States for contactless payments until the rapid emergence of the COVID-19 pandemic. 

What Is RFID?

RFID stands for radio frequency identification. RFID utilizes radio waves to relay information from an object to an electronic reader. RFID technology is utilized in a myriad of different ways. For example, RFID tags can be used to track inventory, identify luggage at busy airports, and even act as an anti-theft measure in retail settings. Many people even implant RFID chips in their animals in case they ever go missing. RFID can be used at long ranges, making it an effective technology for many applications. However, long-range is not necessarily a great trait for payment technology. 

What Is NFC?

NFC stands for near-field communication. NFC technology allows enabled devices close to one another to share data wirelessly. NFC technology is an evolution of RFID. Near-field communication-enabled technology is more precise than RFID. As a result, this technology has gotten very popular in FinTech and the payments industry. 

Unlike RFID, which can be used effectively at large distances, NFC requires proximity of approximately three inches or less to work. In addition, NFC’s proximity restraints make it perfect for credit card payments. For example, you don’t want a person’s card to be charged for items they are not buying as they walk into the store or stand near a check-out terminal. 

How NFC Is Used for Contactless Payments 

Believe it or not, your credit and debit cards emit radio waves. Modern cards are RFID enabled but don’t worry; they use near-field communication and require close contact to send signals. So when you are ready to make a purchase, all you have to do is hold your credit card near the payment terminal. Instead of using a magnetic strip or chip, your card can communicate with NFC-enabled payment terminals using radio frequencies. As a result, transactions can be concluded faster, and your card never has to leave your hand. 

RFID and NFC technology are becoming the norm for most credit and debit cards and payment terminals. However, if you are unsure if your card or the payment terminal you are at is RFID and NFC-enabled, there is an easy way to find out. All NFC-enabled cards and terminals have a small logo that looks like the wi-fi logo turned on its side. If you see this logo, you can use a contactless credit card or even an e-wallet app to make a payment. 

Are Contactless Credit Card Payments Secure?

Contactless credit card payments are just as secure as EMV chip cards. Many consumers worry about data theft with RFID and NFC, but this is uncommon and extremely difficult. RFID-enabled credit cards use unique codes for every transaction. Every time your credit card is used, a new, one-time code is generated, making it very difficult to compromise. 

Additionally, since RFID can be picked up at large distances, the market has been flooded with several products like RFID shielded wallets. Are these protections necessary? No. Yes, modern credit cards use RFID technology, but these cards operate on near-field communication, which means a malicious person would have to get very close to you and have no barriers between your card and their card reader. Your pocket, purse, or wallet is more than enough of a barrier to stop an RFID skimming attack. 

Final Thoughts 

Contactless credit card payments have revolutionized the modern customer experience. Your business should strongly consider implementing contactless payments in your business and applications. If you need help implementing the technology solutions that power contactless payments, reach out to an app development partner. The tech that enables contactless credit card payments is affordable and easy to implement in your business processes.

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