How Do Contactless Credit Cards Work (and Are They Safe)?

If you don’t have a contactless credit card yet, you very likely will soon. While contactless credit cards have been gaining popularity much faster abroad than they have inside of the United States, the desire to limit all unnecessary contact in light of the ongoing coronavirus pandemic means that touchless payment options will only get more common as time goes on.

If you’re new to contactless credit cards (or even if you’ve had one in your wallet for ages now) you may be wondering how they’re different from your old credit cards and how safe they are to use. Here’s everything you should know about contactless credit cards.

They’re Basically Chip Cards with an Antenna

First, a quick refresher on chip cards.

Most modern credit cards now come with a computer chip. The computer chip can create a special, one-time code for every transaction that allows the vendor to get the money you owe without gaining access to your full account information. Because the code only works for that one transition, should the vendor later experience a data breach, your account won’t be compromised as a result.

That’s why it’s generally a better idea to dip your chip card, rather than swipe using the magnetic strip (which essentially exposes all of your account information). And luckily contactless credit cards work almost identically to chip cards – except with a tap instead of a dip.

Information is Exchanged via Radio Transponder

Touchless credit cards use near-field communication (NFC) and a radio antenna to interact with card readers. The process is similar to chip cards, but the information is simply exchanged remotely. The range for these NFC transactions is notably small, meaning you’ll need to hold your card up close to the reader. This makes it incredibly difficult for the reader to accidentally scan the wrong card.

Once the reader has successfully processed the unique transaction code, your purchase is basically complete.

Are Contactless Credit Cards Safe from Potential Thieves?  

Even if you don’t have a contactless credit card, you may already be familiar with the many accessories out there designed to keep your touchless card safe, like RFID-blocking wallets and purses. These items claim to keep your credit card info safe by preventing thieves from being able to remotely skim the data from your card and compromise your account.

And while RFID skimming is a real thing and thieves could potentially use an NFC reader to snatch your credit card information remotely, experts see the threat as decidedly minor. At the end of the day, skimming individual credit cards manually is way more time and labor intensive than thieves tend to prefer, especially when there are simpler ways to obtain consumer credit card information (including simply buying a stack of stolen numbers online).

So you should feel quite secure when using (and walking around with) your touchless credit card. Especially as we’re all trying to touch stuff as little as possible.

Of course, just because your credit card is secure doesn’t mean it can’t cause you plenty of headaches. If your credit card debt is on the rise, we have debt repayment tools and self-help materials to bring your finances back into balance. Connect today and see all the ways we can help you reach your financial goals!

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

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