Five Things You Should Know About Contactless RFID Credit Cards

Posted by Nick Niesen on October 29th, 2010

What is a contactless credit card and how does it work?

For decades, credit cards have relied on magnetic stripes located on the reverse side of the card to store data. To transmit this data, the card must be swiped through a magnetic reader, making physical contact with the stripe. A contactless credit card, on the other hand, stores its data on a chip embedded in the card's plastic. This data is transmitted not magnetically, but rather via a tiny radio signal when the card comes in close proximity of a special reader at the checkout stand. This works through radio frequency identification technology, also known as RFID. When the chip comes close enough to the reader, an antenna on the chip is jolted to life by the electromagnetic field created by the reader, and transaction data is sent to into the system.

What are the advantages of contactless credit cards?

For starters, these RFID credit cards are much faster and more convenient than traditional magnetic stripe cards. A cardholder simply waves the card over the reader, waits a moment for the acceptence signal from the machine, and that's it. There's no need to fumble for cash, and with transactions under $25, there is no need to key in a PIN code or sign a receipt. Just wave and go. Also, since the card never leaves the user's hand, it is considered by some to be more secure.

What are the disadvantages of contactless credit cards?

Some opponents to contactless credit cards have contended that there are security risks with using these RFID credit cards, as the radio transmission could potentially get intercepted by a criminal with malicious intentions. The good news, however, is that the actual credit card number is not transmitted via radio wave. Rather, it is a unique encrypted code only good for RFID transactions. Also, just like ordinary cards, cardholders are not liable for any fraudulent charges.

Where can contactless credit cards be used?

Currently, Visa Contactless, American ExpressPay, and MasterCard PayPass are available at select retailers in certain locations in the United States, including 7-Eleven, McDonald's, KFC, Arby's, Walgreens, Sony Style, Wawa, Sheetz, CVS Pharmacy, and a variety of movie theaters. Retailers capable of handing contactless credit card transactions will have a special symbol on their credit card reader located at the checkout stand. RFID credit cards can also be used at any location that accepts ordinary credit cards, since the new contactless cards will still have a regular magnetic stripe on the back.

Who offers contactless credit cards?

All new American Express Blue and Blue Cash cards now come equipped with the contactless feature. Also available from American Express is an RFID key fob that can be linked to most existing credit card accounts. Chase has teamed with MasterCard and Visa to offer Chase blink cards in a variety of styles.