Everything you need to know about contactless credit cards – Forbes Advisor
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A technology that has been used for years abroad is finally becoming more and more common here in the United States: contactless credit cards. However, you might be wondering how these cards work, whether the technology is secure, and which banks issue contactless cards. So, let’s dive into everything you need to know about contactless credit cards.
How contactless cards work
Contactless credit cards have a small built-in chip that emits short-range radio waves. When you place your card a few inches from a contactless payment terminal, your payment information is transferred.
Although it is often referred to as a “tap to pay”, no tapping is actually necessary. Instead, you usually need to place your card a few inches from the payment terminal to initiate payment.
The transaction may take a second or two, so don’t withdraw your card too quickly. To indicate when the transaction is complete, the payment terminal can beep, display a green check mark, or flash a green light.
To use the contactless payment function, the merchant must have a contactless terminal. These payment terminals are rapidly becoming ubiquitous in the United States, as they are already in Canada, Europe and Australia. You can use tools like this to find merchants near you that accept MasterCard contactless cards.
If you have multiple contactless credit cards, you won’t want to put your wallet or purse on a card terminal. Otherwise, the transaction could be recorded on a card other than the one you intended.
Contactless payment security
After learning how they work, contactless credit cards might seem a little too easy to be safe. Fortunately, you don’t have to worry about the security of the technology.
Like the chips on our credit cards, the contactless card chip creates a one-time code for each individual transaction to accompany your payment information. This code is transmitted along with your account number when you “press” to pay. Your name, billing address and card verification code are not transmitted.
Even if someone were able to fraudulently obtain your payment information, it would be nearly impossible for them to make a contactless payment. In order to generate the one-time code, the thief would have to decipher the complex algorithm that the bank uses to generate it.
This one-time code makes contactless credit cards safer to use than magnetic stripe. When you swipe a magnetic strip, your payment and personal information can be captured by a skimming device. Hackers can then use this information to create a duplicate magnetic stripe for fraudulent transactions.
Instead, the biggest security issue with contactless credit cards relates to physical possession of the card. No PIN code or signature is generally required when using contactless payment. So if your card is lost or stolen, it could be used by someone else without being easily detected.
However, that’s no reason to leave your contactless cards at home. If your card is stolen, the fraud protection of the credit card company should cover all fraudulent charges.
For this reason, some card issuers impose a limit on the amount that can be paid through contactless payment. For example, American Express usually has a limit of $ 30 or € 30 per transaction. However, many of these limits are being raised or removed due to COVID-19.
Benefits of contactless credit cards
In addition to the security benefits, there are many other reasons to get and use a contactless credit card.
By now, we all know the speed – or lack thereof – of payment by “dipping” a credit card chip. It takes enough time between inserting the card and getting confirmation that most payment terminals will ring or ring to alert you when you can finally withdraw your card.
In comparison, “typing” to pay using a contactless chip can take as little as seconds. So, contactless payments are much faster than pulling out a credit card or paying cash. Until then, it’s safer and not much slower than swiping a credit card.
Reduced contact with public surfaces
Since the start of the COVID-19 pandemic, we have all been much more aware of the public surfaces we touch. Using contactless credit cards helps avoid more touch points during the day.
Magnetic tapes and EMV chips can wear out due to repeated contact with payment terminals. Contactless chips, by their very nature, will not suffer from this problem.
A contactless card chip should last for years. However, sometimes a problem can prevent it from continuing to function. If your card stops working, you should easily be able to contact your card issuer for a replacement.
Better for trips abroad
While many of us may not be able to travel internationally at the moment, another benefit of contactless cards will be evident once international travel resumes. Chip and PIN technology has become so ubiquitous abroad, especially in Europe and Australia, that the technology is assumed.
Many self-service ATMs require either a chip card and PIN, or contactless payment. If you don’t have a card with Chip and PIN technology, using a contactless credit card may be the only way to pay.
Banks issuing contactless credit cards
Although you might just find out, contactless credit cards are fast becoming the norm in the United States. There are currently over 190 million Visa contactless credit cards in circulation, and Visa expects that number to reach 300 million by the end of the year. Currently, most major US credit card issuers send contactless cards by default.
American Express claims that “most American Express products have contactless technology” and recommends that cardholders “look for the contactless symbol on the back or front of your card.” If you don’t already have a contactless card, your next renewal or replacement card will have this functionality. However, not all Amex products will be installed with a contactless chip.
Bank of America
Bank of America began issuing contactless credit cards in mid-2019, but only to cardholders in New York, Boston, and San Francisco. Now all newly issued Bank of America credit cards are contactless compatible.
A capital letter
Many Capital One credit cards issued in the United States come with contactless chips. This includes popular cards like the Capital One Venture Rewards Credit Card, Capital One® Savour® Rewards*, Capital One SavourOne Cash Rewards credit card, Capital One Quicksilver Cash Rewards Credit Card and Capital One QuicksilverOne Cash Rewards Credit Card.
Chase’s portfolio currently includes over 20 credit cards issued with contactless chips. This includes some of our favorite credit cards, such as the Chase Sapphire Reserve®, Chase Sapphire Preferred® Card, Chase Freedom Unlimited® and the Ink Business Preferred® Credit Card.
Citi does not list credit cards with contactless chips, only noting that the functionality is “included with certain Citi® cards”. However, Citi does indicate whether or not a card is contactless on the card detail page.
Even before the COVID-19 pandemic, contactless credit cards were poised to take hold in the United States. The payment method is faster than dipping a credit card chip and safer than swiping a credit card strip. But, it is perhaps the “contactless” aspect that ultimately sells us on the adoption of the payment method.
Now that you know how contactless credit cards work, take a closer look at your cards to see which ones are contactless. This would be a great time to contact your bank to apply for a contactless card, if you don’t already have one.