Contactless credit/debit cards: How they work



    Contactless credit/debit cards: How they work

    Technology is evolving rapidly and helping us to simplify the things in our day to day life. In the olden days, we used to pay in cash for any buy/sell transaction. But, now we use a plastic card for everything. Using this plastic card we can do online payments/money transfers/bill payments/point of sale transactions. Let’s discuss the contactless credit/debit cards and how they work.

    In the first generation of these cards, we see a magnetic stripe (this stripe holds the customer data)

    In the second generation of these cards, we see a chip (this chip holds customer data) and known as a smart card.

    Nowadays, most of the financial institutions are issuing contactless (latest technology) cards to their customers.

    Contactless cards help you spend less time while doing any transaction.

    Using contactless cards, one can complete the transaction wirelessly! (the payments gets executed without any physical contact), that is you don’t insert your credit or debit card during payment but you just need to hold the credit/debit card within five centimeters of the payment terminal to process your transaction wirelessly by transferring your card details to the payment terminal.

    The main advantages of contactless cards are speed, convenience, and security.

    Contactless cards are a fast and convenient way to avoid cash.

    Contactless credit/debit cards use Near Field Communication (NFC), which is the technology that works with radio-frequency identification to establish & enable the terminal devices to use contact while in proximity. communication can be established between NFC-enabled objects at a minimum distance of ~5 centimeters.

    these cards are dual interface cards as they contain both EMV chip and contactless technology (Near Field Communication).

    Restrictions :

    These are allowed for a limit of maximum Rs.2000 (two thousand rupees only).

    Best for smaller purchases.


    Entering transaction PIN is not necessary for In USA, UK, Australia. But in India, Reserve Bank of India has made the PIN entry mandatory for all amounts of transactions.

    Read: How to boost your CIBIL score?

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