Contactless payment cards

Contactless payment systems encompass credit and debit cards, key fobs and other mobile devices, such as smartphones, that allow you to make secure payments by simply waving the card or other device over the reader terminal. While there are some similarities between contactless payments and mobile payments, which can also be made on your smartphone, the main difference between the two is that mobile payments generally use a broader mobile or Wi-Fi network, while contactless payments require close physical proximity.

Contactless payment cards are regular chip-and-pin cards with the addition of an antenna that allows secure contactless communication between your card and the reader. Typically, contactless credit and debit cards have a maximum range of about five centimetres, which means that they must be held quite close to the reader terminal in order to receive its radio frequency. Once the signal is picked up by the card's antenna, the payment is made. The close proximity requirement also helps to avoid accidental and erroneous payments. While on the subject of erroneous payments, let's discuss the main pros and cons of contactless cards.

Advantages and disadvantages of contactless payments

Certain bank customers are worried about the security of contactless cards. The main security issues relate to the question of what happens if you lose your card or it gets stolen. The answer is that you will very likely end up losing a small amount of money, unless you manage to block your card before someone tries to use it. The good news is that banks have thought of several security tricks to minimise the potential for losing money in the event of theft. All contactless cards set reasonably low limits on the amount you can spend without entering your PIN. These limits vary from country to country, ranging from 10 EUR in the Baltic states to 1000 CNY (~137 EUR) in China. In addition, many banks require you to enter your PIN after 3-5 consecutive contactless payments, even if the transaction does not exceed the spending limit. Finally, if your card does end up in the wrong hands and you lose money, your bank may offer to reimburse you.

Nevertheless, there is a belief that banks see contactless payment as an opportunity to make money from shopkeepers, who bear the costs of the merchant terminals that support contactless payments and of processing transactions, and that this is being done at the expense of the safety of customers' money. These costs might explain why in some countries relatively few retailers offer the option of paying by contactless card. This means that you may end up with nowhere to use the contactless payment method offered by your new card.