Edited by Michelle TipswordWhat Is a Contactless Card?
Quick Answer
Contactless cards use near-field communication (NFC) to make payments when you hold them near a contactless-enabled terminal. They can speed up payments and reduce the spread of germs, but they may enforce transaction limits.
Swiping your credit card may feel as archaic as paying with cash. With each new technology, credit card transactions are becoming more and more efficient—and contactless cards are no exception.
Contactless cards use short-range wireless technology called near-field communication (NFC) to make payments when you tap or wave them near a compatible terminal. Most new cards are dual-interface; though they have the ability to be contactless, they still work by inserting or swiping.
Contactless cards can dramatically speed up transactions, but they're not perfect. Read on to learn more about contactless cards' pros and cons, how they work and whether or not they're safe.
What Is a Contactless Card?
A contactless card is a credit or debit card that lets you make a payment by tapping or hovering your card near a payment terminal. Using a contactless card is similar to using a digital wallet—but instead of tapping your smartphone or smartwatch, you tap your card.
Also known as "tap and go" or "tap to pay," contactless payment uses near-field communication—a form of radio frequency identification (RFID)—to briefly communicate with a card reader. This technology allows contactless cards to securely send payment information to card readers without physical contact.
Tip: In addition to having the tap-to-pay feature, many contactless cards still come with a chip. This means you can still use them even when a merchant doesn't offer contactless payment.
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Pros and Cons of Contactless Cards
Contactless cards have a lot to offer in terms of convenience and security. But as with any new technology, there are pros and cons to consider.
Pros
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More efficient: Paying with your contactless card only takes a few seconds and is quicker than swiping, inserting the chip or paying with cash.
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Less physical contact: Using a contactless card can help stop the spread of germs, minimizing your and your card's contact with payment terminals.
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Increased security: Using tap to pay is much more secure than swiping your card. Like using a card's chip, contactless payment generates a one-time code that protects your information. Additionally, you avoid the risks involved with skimming and shimming since you aren't inserting your card.
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No accidental payments: You don't need to worry about accidentally making a payment, as the retailer needs to initiate the transaction before you can pay. Plus, your card needs to be within a couple of inches of the reader to make a payment.
Cons
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Potential fraud risk: Contactless cards don't require a PIN, up to a certain dollar amount. Though convenient, this makes it easier for thieves to use lost or stolen cards.
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Limited availability: Not all merchants offer contactless payment. This means you may have to fall back on using your card's chip or magnetic stripe.
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Transaction limits: While there's no universal limit on contactless payments, certain banks or credit card companies may enforce their own limits. For example, American Express caps contactless payments at $250.
Learn more: What to Do if Your Contactless Card Doesn't Work
Are Contactless Cards Safe?
Contactless cards are generally considered a safe payment method, especially compared to swiping your card. Similar to using an EMV chip card, tapping your card generates a one-time code that securely transmits your payment details. Plus, your card has to be within an inch or two of a card reader to make a purchase. This makes accidental payments nearly impossible.
Plus, if you do become a victim of fraud, many card issuers won't hold you liable. For those that don't, though, federal law caps fraud liability at $50 if reported within two days.
How Do I Know if My Card Is Contactless?
To find out if your card is contactless, look for the contactless symbol: four curved vertical lines increasing in length from left to right. (It looks similar to the Wi-Fi symbol turned on its side.) You can also try hovering your card near a contactless payment terminal at checkout to see if it allows the transaction. Alternatively, you can call your debit or credit card issuer and ask if your card is contactless.
How to Use Contactless Cards
Using a contactless card is simple and convenient. Here's how it works:
- Look for the contactless symbol. Confirm your card allows contactless payments, and look for the contactless symbol on the payment terminal.
- Tap your card. After the retailer initiates the payment, tap, wave or hover your card within 1 to 2 inches of the payment terminal.
- Confirm payment. After a second or two, your payment should go through. Listen for a beep or look for a light or checkmark to confirm your transaction is complete.
Learn more: What Is Card Skimming and How Can You Avoid It?
Frequently Asked Questions
The Bottom Line
Contactless cards use near-field communication to share payment information and complete a transaction without you needing to swipe or insert your card. Though a marvel of convenience (and a boon for those wary of germs), you can't use contactless cards everywhere, and there may be transaction limits to keep in mind.
Contactless cards are generally a very safe payment method, but you should always take steps to protect yourself. Start by getting a free credit report from Experian and reviewing it carefully for any signs of fraud.
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