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What are the Benefits of Contactless Cards?

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Contactless credit and debit cards are becoming more widely accepted at point-of-sales systems across the country as retailers adopt this form of payment processing. Read this article to learn more about contactless cards, how they work and how they help safeguard your transactions from fraud.

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Woman at restaurant table paying for meal by touching contactless credit or debit card to payment terminal.

How do contactless cards work?

As digital wallets and contactless technology have evolved, more people have become familiar with the convenience of completing their purchases with a simple tap of their card to the payment terminal. Fewer people, however, understand how the processes behind these payments take place.

Contactless cards contain a chip that generates a one-time code that contains your payment information. This code is transmitted to the checkout terminal or point-of-sale system via radio frequency identification and near-field communication technology.

Your card information is electronically transmitted, allowing you to complete the payment by holding your card near the payment terminal. As long as the card is close enough to the card reader, your transaction should complete, meaning you don’t need to physically touch your card to the terminal.

What are the benefits of contactless cards?

Some people may wonder why they need a contactless card when their older cards are still working. Below are some of the main benefits of having a contactless credit or debit card.

Speed of transactions

One of the main benefits of a new contactless card is speeding up the checkout process. You can make a payment by simply holding your card near the contactless symbol on the payment terminal.

This process is much faster than having to swipe or insert your card and enter the personal identification number (PIN) and takes only seconds to complete.

Longer lasting

Since contactless payment systems don’t need to physically read a chip or magnetic stripe, these types of cards tend to last longer.

We all remember having cards where you’d have to swipe multiple times to get the card to read because the magnetic stripe wore out over time. Now, all of the necessary data is transmitted through electromagnetic waves, making scratches, scuffs and worn-out cards less of an issue.

This means that you need to replace your card less frequently, which helps you avoid the hassle of getting a new card number and switching over your recurring payments and auto drafts.

More hygienic

As the name suggests, contactless cards reduce the number of contact points when shopping. With the world being more concerned about disinfecting high-touch areas, contactless cards make it easier to keep things clean.

Are contactless cards safe?

In the past, credit and debit cards only had one way of authenticating payment: a magnetic stripe. These stripes transmit a digital fingerprint unique to the card and contain your account number, verification code and other payment information.

However, as time passed and financial fraud and data theft became more common, a new form of payment authentication was needed. Europay, Mastercard® and Visa® (EMV) chips came onto the scene as a way to help protect cardholders' financial data.

Magnetic stripes transmit the same digital fingerprint for every transaction, making it easier for criminals to duplicate transaction and payment information. In contrast, EMV chips generate new data for every transaction, making duplication more difficult.

Contactless cards and tap-to-pay technology are just as safe as EMV chip cards. Like their EMV counterparts, these new cards also generate a new code for every transaction, making it harder for criminals to copy your payment information via skimming or other means.

However, the ease of use and convenience of contactless cards also creates some physical security considerations. If you have a contactless credit or debit card, you’ll want to put extra effort into not losing your card.

These types of cards may not require a PIN to complete the transaction. If you lose your card, it may be easier for criminals to use your card for purchases.

In the event that your card is lost or stolen, you should be able to put a temporary freeze on your card through online or mobile banking. If you notice purchases on your statement that you didn’t make, contact your financial institution right away to freeze your card, get a new card and/or reverse the transaction.

Contactless cards are becoming a standard method of payment processing because they are safe, reliable and convenient. They hold many of the same benefits as EMV cards and magnetic stripes, but with a smoother and easier customer experience.

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