What is contactless, how it works and limitations

contactless is now a widely used payment method. But how exactly does it work and what are the limits to which it is subject?

There are precise rules for the operation of this system that allows you to pay with credit cards, debit cards, smartphones and other devices without any physical contact. The reading and transfer of data occurs simply by placing the card and the reader close together.

Very often, but not always as we will see later, to correctly perform this operation there is not even the need to enter the PIN. Contactless therefore becomes a truly easy, practical payment system with high security margins.

Today it is possible to use it in various ways, thanks to the existence of sophisticated devices such as mobile phones or smartwatches that can also perform contactless payment functions. Statistics have shown that out of 10 card payments in physical stores, 9 are made in contactless mode with the appropriate readers. The trend is growing.

Below, everything you need to know about the ways of using and limits of the contactless system.

What is contactless

Contactless literally means "without contact". This term is usually used to indicate:

a payment system that allows you to make purchases in physical stores by simply bringing your bank card or device close to the POS, without typing the PIN.

The main advantage is therefore the speed of the operation. In fact, the user no longer needs to insert the card into the reader or type the secret code associated with it. All he has to do is bring it close to the reader and, after the acoustic signal, the payment transaction can be considered completed successfully.

How contactless payment works

To make a purchase with a contactless payment card, you need to bring the card close to the POS near the chip for a few seconds, until the terminal emits the recognition sound.

This innovative system is made possible by RFID (Radio-frequency-identification) technology.

Specifically, contactless cards are equipped with electronic tags (also called tags), which contain the data needed for the payment. For the operation to take place, it is essential that the tags are read and interpreted by the readers (i.e. the POS). The reading process is made possible by radio frequency.

This explains why contactless makes it unnecessary to insert your bank card into the POS and enter your PIN every time.

How to activate contactless? The card is activated automatically after the first payment made using the standard system (chip + PIN).

With which devices can you pay contactless?

The contactless payment method is now so widespread that all cards in circulation allow this type of operation.

In general, credit cards, debit cards (ATM), prepaid cards, and cards with IBAN are all equipped with the necessary technology for contactless payments in physical stores. To understand if your card is contactless, just check for the presence of the symbol of the four rising waves.

Smartphones equipped with NFC (near-field communication) technology are also used for contactless payments, simply by bringing the phone close to the POS (which also has an NFC chip).

To use contactless with a smartphone, two requirements are essential:

• have a contactless card
• have a cell phone with an NFC chip

Usually, NFC is mounted on all the latest generation cell phones belonging to the medium-high range of the market. However, it is more difficult to find it in cheaper phones.

To find out if your smartphone has an NFC chip, simply open Settings (the gear icon), tap on Connected devices (or a similar item) and view the available connection methods (including Bluetooth).

NFC should also be present on the same screen (it must then be activated for it to work correctly, just a simple tap on the gray lever, moving it to the active state).

Now all that remains is to associate the contactless card with the phone.

The exact same procedure can be performed on smartwatches, the latest generation of multifunctional devices. Contactless payment, in this case, occurs with the flick of a wrist.

Contactless, is it really safe?

When it comes to contactless payments, the biggest concern in terms of security comes from the fact that they work without having to type the PIN.

However, contactless cards offer the same guarantees as the best traditional credit cards.

In reality, precisely because of not having to write the PIN in public, the new generation cards guarantee greater privacy. Furthermore, the contactless system works like this: sensitive data such as credit card numbers and customer details are encrypted during NFC transactions and are almost impossible to intercept.

In the unfortunate event that your contactless bank card is stolen or lost, you should immediately call the toll-free number provided by your bank to block it (the same procedure that would be followed if you lost a traditional credit card, debit card or prepaid card).

And even if someone were to succeed in defrauding a user in possession of a contactless card, compensation from the bank would not be in question since payments are traceable, with law enforcement easily tracing the identity of the scammer.

In this case, a simple way to protect yourself is to activate SMS notifications for each payment made, in addition to constantly monitoring the card movements.

Original article published on Money.it Italy. Original title: Cos’è il contactless, come funziona e limiti