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All You Need to Know About Contactless Credit Cards and Payments

All You Need to Know About Contactless Credit Cards and Payments
Jason Steele

Jason Steele

Updated February 11, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Contactless credit cards are a no-touch form of payment that works by using radio frequency identification (RFID) technology to process transactions. They are effectively an alternative to swiping a magnetic stripe or inserting your card for chip payment. Among other important credit card terms, it’s important to know what a contactless card is as well as how to use a contactless credit card since they’re becoming increasingly common.

What Is a Contactless Credit Card?

A contactless credit card uses RFID technology to send payment information without any physical contact. To use a contactless card, you simply hover or tap a credit card over a card terminal. The card then emits short-range electromagnetic waves containing your credit card information to the point-of-sale system. The transaction can then be completed.

How Contactless Credit Cards Work

The way credit cards work when they’re contactless is through a small, embedded chip that emits electromagnetic waves. This is a different chip than the one you use to insert your card for payment, which is an EMV chip. The embedded RFID chip in a contactless card transmits your payment information when your card is placed within a few inches of a contactless-enabled payment terminal. This transaction takes a few seconds to complete.Although contactless credit card payments may also be referred to “tap and go” or “tap to pay,” no actual tapping of your card is necessary for the transaction. 

How to Know If Your Credit Card Is Contactless

If you’re wondering whether your credit card is contactless, simply look for the contactless symbol on the back or front of your credit card. The contactless symbol looks like a WiFi signal turned on its side, with four curved lines that get larger from left to right.This same contactless symbol will also appear on a card terminal’s screen to indicate when contactless payment is accepted by the vendor.

Benefits of Contactless Credit Cards

There are many benefits of contactless credit cards, including speed, reduced contact with public surfaces, upkeep for the card and ease of use during international travel. Here’s more on each of the major benefits of using a contactless card:
  • Enjoy speed and safety when paying: One of the best known benefits of paying with a contactless card is how quick it is. When using a contactless credit card, it can take only seconds for a payment to go through. In fact, paying with a contactless card can be up to 10 times faster than paying by swiping or inserting a card. When a payment card needs to be inserted for the chip to be read, it can take longer as the transaction is authenticated. And although a magnetic stripe swipe is fast, it’s not always the safest way of paying since the account information on a magnetic stripe isn’t encrypted. A card’s security is definitely among what to consider before choosing a credit card.
  • Avoid touching surfaces: Contactless cards also help avoid having to touch public surfaces, since the card only hovers over the payment reader. This can be perceived as a benefit for those who are trying to avoid germs.
  • Minimize wear and tear on your card: Using a contactless credit card also causes less wear and tear on your card. Magnetic stripes and EMV chips can wear out over time from repeated contact with payment terminals. But since contactless chips don’t need to physically touch any terminals, they don’t have this problem.
  • Make payments overseas more easily: Although neither contactless cards nor credit card PINs are extremely common in the U.S., they are becoming common overseas, especially in Europe. Indeed, many payment machines in Europe require either a chip or PIN-enabled card or contactless payment. Having a contactless credit card can thus make payment easier if you’re traveling abroad.

Disadvantages of Contactless Credit Cards

Contactless credit cards also have their drawbacks, including:
  • Lack of reliability: One of the main disadvantages of contactless credit cards is their occasional unreliability. Sometimes, contactless payments don’t go through even when the card reader signals that it accepts contactless cards. 
  • Challenges to using: Consumers may also have a hard time determining whether a credit card terminal is compatible with contactless payments, or where they are supposed to wave their card. Indeed, it may be a bit more challenging to figure out how credit card payments work than it would usually be with your more standard swipe or dip.
  • Limited acceptance: Although contactless payment cards are on the rise, they aren’t accepted everywhere. This may particularly be the case at independent retailers.

Are Contactless Credit Cards Safe?

Contactless credit cards are among the safest forms of payment. This is because they create a one-time code for each transaction, which makes it very difficult for hackers to recreate this code. On the other hand, cards with magnetic strips are more susceptible to hackers, since magnetic strips are more easily duplicated.If your contactless credit card were to be compromised, it would most likely be due to it being physically stolen. Since signatures are often not required for contactless payments, a thief has to have physical possession of your contactless credit card to use it fraudulently. While your card issuer’s fraud department may be able to flag potentially fraudulent charges, it’s still important to pay attention to any unusual charges in your account. And of course, always contact your credit card issuer right away if your card is lost or stolen.

Compare Contactless Credit Cards With Lantern

Contactless credit cards are an easy, no-touch way to complete a transaction. To use a contactless card, you simply have to hover or tap the card over a credit card terminal. There are a number of benefits to contactless payment, including safety, ease of use and less wear and tear on your card. However, you may not find contactless cards accepted everywhere, and they can sometimes be finicky to use. If you are not sure that contactless credit cards are for you, you may want to consider other credit cards. Lantern can help with that through our roundups of top credit cards, and you can also look into pre-approval for credit cards.
Photo credit: iStock/AJ_WattThe tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.SOLC1221045

Frequently Asked Questions

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About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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