Contactless payments are not new to the world of payments. The Seoul Bus Transport Association launched contactless payments as early as 1995. But the recent Corona pandemic gave a new twist to the contactless payment with trillions of transactions worldwide being made via contactless cards. 

What Are Contactless Cards? How Do They Work? A Brief Look Into The History Of Contactless Payments From Creditmantri. 

Contactless payments are the easiest and the fastest ways to make payments; both at merchant locations and person to person payments. Contactless payments are also the most secure way to make payments as they are linked to the RFID chip and cannot be easily hacked. 

Before we get into the details, we need to know a little bit about the different kinds of contactless payments in the current market - 

1. Contactless Cards - Both credit card & debit card

2. Contactless Payment Channels - Eg; Samsung Pay

The buyer taps or waves his contactless card against a contactless reader, usually the POS machine. It reads the chip on the card and deducts the amount from the card.

As the customer does not share billing or payment information with the vendor directly, contactless payments are known to be secure. All communication is encrypted instead, and each purchase is tokenized with a one-time transaction number. If a wireless transmission is intercepted, the only information obtained by the attacker is the one-time code used to identify a specific transaction.

What Is The Technology Behind Contactless Card Payments?

  • A contactless debit card or credit card contains a microchip that can emit radio waves. 
  • The card also includes a plastic antenna designed to secure the connection with a card reader. Near field communication, or NFC for short, is the technology at work here. 
  • To pay for something, the customer brings their contactless card close to the reader, allowing the card's microchip and the card reader to communicate. 
  • The transaction details are sent by the card reader, the payment details are returned by the card, and the payment is handled by the merchant's payment processor.

This technology has now been adopted for contactless payments via smartphone too. 

Samsung Pay is one such example of a contactless payment system. 

  • The wireless technology used for mobile payments is known as near field communications technology (NFC), and it connects via radio waves. Because payment terminals in stores are NFC-enabled, they can communicate with and transfer data to other NFC-enabled devices.
  • When you install a mobile payment app and configure your mobile wallet, your smartphone functions as a credit or debit card. The payment terminal can then 'read' the data on your phone's screen or back and deduct the appropriate amount from your bank account.
  • Laptops, tablets, and smartwatches can also become NFC-enabled, allowing them to share data with others when in close proximity. Consider Bluetooth: a wireless connection that can connect two devices and exchange whatever information is required.
  • When not in use, turn off NFC on your device to save battery life and keep your credentials secure if your phone is lost or stolen.

Also Read: Contactless Credit Card

Why Are Contactless Payments Better Than Card Payments? 

  • They take lesser time to process
  • They are much safer than card payments or digital wallets
  • They are convenient for small value purchases
  • You get instant alerts and confirmations for all your transactions
  • Easier to keep track of your spending patterns and payments history

Are Contactless Credit Cards Safe?

They are pretty safe. There is a common myth that thieves can scan the card, even when they are in your wallet, and steal your money. It is actually not true. For a transaction to be effected using a contactless card, the card and the machine have to be at a proximity of at least 2 inches. So the chances of that happening is pretty slim. 

Some people are also misinformed that money can be deducted every time you go near the POS machine. That is not the case. The merchant has to initiate the transaction first and only then it will read the card. Once it reads your card and the transaction is complete, the machine will not deduct any money even when you swipe the card. 

Users Should Also Take A Few Precautions While Using A Contactless Card - 

  • Use the card only at a POS machine that is in the same room as your wallet. 
  • Use the card for purchases at reputed establishments only. 
  • While downloading payment apps, make sure you don't download any of the apps from 3rd party websites. Use authorized app stores like Google Play or Amazon Appstore only. 
  • Ensure that the passwords you use for these apps are strong and unique.
  • You can set multi-layer authentication for your bank accounts on your mobile phone. 
  • Regularly check your bank statement to ensure that there are no unauthorized transactions.



1:How do I find out if my card has a contactless payments option? 

Contactless cards have a ‘wifi’ symbol ( Contactless Images, Stock Photos & Vectors | Shutterstock) on them to denote that they are enabled for contactless payments. 

2:Do I need to enter the PIN number for contactless card payments? 

No. The whole point of contactless card payments is that you don’t have to enter the PIN number. 

3:Is there a limit for the contactless payment amount? 

Until recently, banks had set a limit of up to Rs.2000 for contactless payments. But this limit has been either removed by most banks or increased. Please check with your card provider on this limit. 

4:Where can I make contactless payments?

Contactless payments can be made at any merchant establishment with a contactless payment POS machine. 

5:What if my contactless card is lost or stolen? 

You follow the guidelines for any lost or stolen card; call the bank immediately and block the card. You can also disable the contactless payment option through the bank’s mobile banking app. The feature to block a card is now available with most banks’ mobile banking apps.