How Contactless Payments Work

You’ve probably witnessed this occur in a restaurant, supermarket, or even a vending machine – the cashier rings up your order and you then tap your credit card using a contactless system on the terminal for payment. It might appear like magic, but it’s actually a new method of paying that can improve your business’s efficiency and decrease friction with customers.

The process works by using near-field communication (NFC) technology. When a card is tapped near the point of sale (POS) system that asks you to pay, information is transmitted electronically from the chip in the card to your bank. The system then communicates back to you with an audio beep, checkmark or green light to confirm that the transaction was accepted.

Unlike traditional cards with magnetic stripes, the data on contactless chips is secured which makes it impossible for hackers to use a skimming device to steal data and make fraudulent transactions. Contactless cards are popular because they reduce the risk for both you and your customer.

Modern credit and debit cards have NFC which means you can pay at numerous establishments that accept contactless payments. You can also link them to mobile wallet applications and digital payment platforms that let you pay for transactions using contactless technology from your smartphone, such as Apple Pay, Google Pay or Samsung Pay. These mobile apps can be used as an alternative to or as a substitute for your credit or debit card, and are convenient for those who have multiple cards.

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