How do Contactless Cards Work?

How do Contactless Cards Work?

September 11, 2019         Written By Bill Hardekopf

Your issuer may have sent you a new credit card that lauded the ability to pay by simply tapping the card on the reader. Or you may have seen a sign at your local retailer stating that contactless cards are accepted. But, what is a contactless card, and are they safe to use?

How do contactless credit cards work?

Contactless cards contain a chip that sends payment information to a contactless card reader. When the reader detects your card, it will communicate with the chip and process the payment. This is the same near-field communication (or NFC) technology that is found within your mobile phone.


One of the advantages to contactless credit cards is they speed up transactions. Instead of swiping your credit card or inserting it into a chip reader, you can simply tap your card against the payment system. Not only are these cards faster, they may also be safer. Like mobile wallet or EMV chip transactions, contactless cards complete transactions with a dynamic cryptogram instead of your card details. Hence, it will be more difficult, if not impossible, for unauthorized parties to steal your card details, even if they hack the payment processing system.


Most people can see that contactless card transactions are faster, but it’s harder to convince consumers that these transactions are also more secure. Many Americans are slow to adopt NFC technology, whether in their credit card or mobile device, because they worry about security risks. Since this is unwarranted, the payment card industry needs to do a better job educating consumers, if they want to speed up the switch.

Another issue is that not all retailers have a contactless card reader, a special reader with a radio wave logo on it. This means retailers would need to invest in new technology—a hard sell after many have just updated their payment card systems to welcome EMV chip credit cards.

Will these cards ever replace traditional credit cards?

It is hard to predict whether contactless credit cards will replace the ones in your wallet, as there are a number of variables. However, up to 95% of retailers now have contactless card technology, as they upgraded to NFC point-of-sale systems at the same time they updated to EMV chip card readers to meet the demand of mobile payments. If consumers and card issuers demand the technology, surely retailers will adopt these payment card systems.

The information contained within this article was accurate as of September 11, 2019. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.


About Bill Hardekopf

Bill Hardekopf is the CEO of and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.
View all posts by Bill Hardekopf
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