How contactless card payments work

In use for some years, they are consolidating among our habits: they are contactless cards, that is, without contact. You can find contactless technology in all types of payment cards: credit cards, debit cards (ATMs), prepaid cards, cards with IBAN. Contactless is also the smartphone’s operating mode when you use it as a credit card with a mobile payment app.

How does a contactless ATM work? Or how does the contactless system work with any payment card anyway? After the clerk or cashier has set the amount to be paid on the POS reader, there is no need to give the card to this person to insert it in the POS, then enter the PIN (Personal Identification Number) or sign the receipt to authenticate yourself. You just pull the payment card to the POS display.

You can use a contactless card for expenses of any amount, but up to € 25 you do not need to dial the PIN or sign the receipt: the payment is automatic and, to understand that it has been carried out, just wait for the confirmation beep from the POS. How do you recognize a POS or a contactless card? With a symbol similar to that of wi-fi.

Contactless cards use RFID (Radio Frequency Identification) technology: the integrated antenna “communicates” with the POS via radio waves and, in this way, a card authorizes payment.

And from a security point of view? The contactless payments are safe because:

The card always stays with you

It is impossible to buy “by mistake”: the POS must be activated for there to be a payment

Even if you bring the card to the POS several times, a single transaction is recorded, that is, a single payment

Card data is not transmitted

For each transaction, the card generates a unique authorization code, which cannot be used for other expenses

With a contactless card it is important to pay the same attention as you use with a traditional card: do not pay it to anyone, keep your PIN carefully, pay attention to instant notification SMS on purchases/withdrawals, monitor the movements of the card via, for example, home banking and ATMs bonds premium. If, however, you see a suspicious exit: contact your bank. By the way, remember that the law protects you: in the event of unauthorized debits, the bank will reimburse you the amount, except for a maximum deductible of € 50.

To conclude, if until 2020 the threshold for contactless payments without PIN request or signature for authorization was € 25, in Europe from 2021 it becomes € 50. A security measure “pushed” by the Covid-19 pandemic, to limit the risks of contagion as much as possible by avoiding people handling cash and typing codes on POS keyboards.

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