Your guide to contactless payment — and the many benefits of using it
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
The advantage to using rewards credit cards for as many of your expenses as possible goes beyond the massive bonuses you can earn or useful perks, like airport lounge access. There is also an added level of security to using a credit card instead of a debit card or cash. If your credit card information is compromised you’ll have better fraud liability coverage and many of the best travel credit cards come with other coverages, including purchase protection, extended warranties and price protection.
As technology continues to advance, credit card issuers are introducing contactless payment methods to the U.S., where it has been much less popular than other areas, like Europe and Canada. Contactless payments are not only more convenient, but also more secure than swiping your card. So let’s take a look at which contactless payment options are available for you and why it’s growing in popularity.
What are contactless payments?
Contactless payments come in two main forms on a credit card – mobile wallet or app payments and via contactless technology embedded directly into the card. If your card is equipped with contactless technology simply hold it near the card reader to complete your transaction. Keep in mind, the payment terminal will need to have near-field communication (NFC) capability, so this won’t work for older card readers.
However, Samsung Pay uses different technology than contactless cards and other virtual wallets (Apply Pay, Google Pay, etc.) In addition to using NFC, Samsung Pay also has what is known as magnetic secure transmission (MST). MST allows people to use Samsung Pay on almost any of the older magnetic card readers. Given how slow the U.S. has been to adopt this technology this makes Samsung Pay the most useful form of contactless payment that is currently available. The biggest drawback with Samsung Pay is that it’s only available on Samsung devices.
Related reading: How to take your small-business contactless
Are contactless payment methods more secure?
The way contactless payments work is a unique one-time token is sent to the payment terminal for each transaction. The token does not contain any of your card details, so if the purchase is compromised that token cannot be used to make another purchase and the hacker won’t have your card information. This added layer of protection is the same system that is used when you insert your card’s chip into a card reader, except contactless payments process much faster (in about half the time). Mobile wallets also have the added step of needing to verify with a PIN, password, fingerprint or facial recognition before a payment can be made.
One common concern is that thieves could use NFC card readers to steal your data electronically by getting physically close to your wallet. However, any evildoer would need to extremely close (within 4-10 centimeters) and thanks to tokenization they won’t be able to swipe your card data. Not only that, but experts agree that this isn’t a viable threat. Think of it this way: You don’t need to be faster than the bear, you just need to be faster than the people you’re with. There are much easier ways for criminals to commit credit card fraud and using contactless payment methods is one way to move yourself to the front of the pack.
Where in the U.S. can you make contactless payments?
While contactless payments are not as popular in the U.S. as elsewhere, they are becoming much more common each day. In the U.S. only a small percentage of credit card transactions are made using contactless technology. However, the vast majority of transactions are processed on payment terminals that are NFC enabled and that number is growing every day. And that’s on top of the fact that nearly everyone has a smartphone with access to a mobile wallet.
Related reading: Does your Amex card feel light? Here’s why
Many merchants also have contactless payment options available with their apps. For example, you can make a contactless payment at Dunkin’ Donuts or Starbucks through their apps. And we’re seeing the technology spread to public transit with the New York MTA testing a new contactless system.
Which card issuers are using contactless payments in the U.S.?
Almost every major card issuer in the U.S. has already begun rolling out contactless card technology or has announced plans to. But even if a specific card that you have isn’t outfitted with contactless payment technology you still have the option of adding that card to a mobile wallet and making touch-and-go payments that way. This effectively means that as long as you have a smartphone, contactless payment is an option for you.
For more information, check out our guide to our favorite contactless payment enabled credit cards.
Contactless credit cards and payments are wildly popular abroad, but have been slow to catch on in the U.S. However, that is rapidly changing with the spread of NFC payment terminals and with nearly every major U.S. bank issuing contactless cards.
Given the increased security and speed that comes with this payment option it’s surprising that it has taken so long to gain popularity here.
New to The Points Guy? Want to learn more about credit card points and miles? Sign up for our daily newsletter.
Featured photo by Jacob Lund/Shutterstock.
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.