Contactless Credit Cards - What Are They And How Do They Work?

Contactless Credit Cards - What Are They And How Do They Work?

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Credit cards have become not only a way to pay things, but also a necessity and for some, a fashion statement. And now, in response to consumers wanting to avoid unnecessary contact due to the coronavirus pandemic, contactless credit cards are rising in popularity.

Typically, you have to slide or insert your credit card into a payment terminal to complete your transaction. But credit card issuers are now recognizing the demand for making transactions easier and safer.

What is a contactless credit card?

A contactless credit card allows you to pay for a transaction by simply holding it over a payment terminal.

Contactless payment not only reduces your contact with the terminal, but also processes much faster than "dipping" your credit card. If you are a manager of a coffee shop and have a long line, those few extra seconds that customers must wait for a terminal to process a credit card chip, also known as the Europay Mastercard and Visa (EMV) chip, can make a real difference.

The technology is great, but isn’t currently on all credit cards.

Which credit cards are contactless?

Contactless credit cards are very new, so older credit cards will likely not have this feature. The feature is common on travel rewards credit cards and cashback credit cards.

Here are a few examples of contactless credit cards:

How to know if your credit card is contactless

Since many issuers quietly rolled out contactless technology to their cards in the past year, you may already have a contactless card in your wallet and not realize it. How do you tell if you have a contactless credit card? Look for the following symbol on your card (it looks similar to the Wi-Fi logo):

Tap to pay

The technology behind contactless credit cards

Contactless credit cards use radio-frequency identification technology, or RFID for short. Each time you tap your contactless credit card to a payment terminal, it creates a unique one-time code. This helps prevent people from stealing your credit card info.

Where is the contactless chip in a credit card?

The contactless chip is typically located right beneath the RFID-logo. This is important to know as when you tap your credit card to pay on a terminal, the chip must be in close proximity to the terminal.

How safe are contactless credit cards?

Not only does contactless technology save you from having to touch the credit card terminal — it protects cardholders from credit card fraud. From time to time, criminals will install an additional part on a terminal at places like gas stations or ATMs that will capture your credit card information. With a contactless credit card, you can ensure your information has less chance of falling into the wrong hands.

How to use a contactless credit card

It is very simple to use a contactless credit card. There is no additional set-up needed. Once you activate your credit card and visit a payment terminal, simply hold your credit card about one inch above the payment terminal, with the contactless symbol pointed at the terminal.

To identify if a terminal is capable of accepting contactless credit cards, be sure to look for the contactless symbol (usually located near the top of the terminal):

How to use a contactless credit card

If the payment is successful, you will typically hear a "ding" sound. This process takes about one second, whereas inserting the EMV chip of a credit card can take a few seconds to process.

Stores that accept contactless credit cards

As the popularity of contactless credit cards and mobile payment grows, more retailers are installing payment terminals to accept either payment method. As the time of publishing, the following retailers accept contactless credit cards:

  • Costco
  • Walmart
  • Target
  • Lowe’s
  • Bed Bath & Beyond
  • Nordstrom
  • Best Buy
  • Office Depot
  • Staples
  • 7-Eleven
  • Starbucks
  • McDonald’s
  • Ross Stores

Note, this is just a sampling of retailers with contactless payments terminals. Keep an eye out for the contactless symbol at your favorite retailer to see if you can use contactless payment.

Other ways to pay contactless

If you don’t have a contactless credit card, there are other ways to minimize contact while you pay.

If you have a smartphone, any of your debit or credit cards can become contactless with mobile wallet apps. The most popular apps are Google Pay, Apple Pay and Samsung Pay.

Large retailers like Costco and Walmart are beginning to retrofit their payment terminals to accept mobile payments. While this technology is much more prominent outside of the U.S., the demand for alternative payment options is increasing. And in the wake of the COVID-19 crisis, consumers are sure to look for options that minimize unnecessary contact.

Other ways to pay contactless

Best contactless cards

Contactless payments are routinely accepted at large retailers and restaurants, so having a travel rewards credit card or cashback credit card that offers bonuses around these categories can be very rewarding. If using a contactless card interests you, here are several options to choose from, and where you can use each card to earn heaps of rewards:

Card
Welcome offer
Annual fee
Rewards
American Express® Gold CardEarn 60,000 Membership Rewards® Points after you spend $4,000 on eligible purchases with your new Card within the first 6 months.$250Earn 4X Membership Rewards® Points at Restaurants, including takeout and delivery, and earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), and 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com. Terms apply.
Chase Sapphire Preferred® CardEarn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Ultimate Rewards®.$955X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining and 2X points on all other travel purchases
Chase Sapphire Reserve®Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.$5505X total points on air travel and 10X total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3X points on other travel and dining & 1 point per $1 spent on all other purchases
Ink Business Preferred℠ Credit CardEarn 100,000 bonus points after you spend $15,000 on purchases in the first 3 months from account opening.$95Earn 3 points per $1 on the first $150,000 spent in combined purchases on travel, shipping purchases, Internet, cable and phone services, advertising purchases made with social media sites and search engines each account anniversary year. Earn 1 point per $1 on all other purchases—with no limit to the amount you can earn.

For rates and fees of the American Express® Gold Card, please click here.

The information related to the American Express® Green Card, and Chase Freedom® has been independently collected by ValuePenguin and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply to American Express credit card offers. See americanexpress.com for more information.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The products that appear on this site may be from companies from which ValuePenguin receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). ValuePenguin does not include all financial institutions or all products offered available in the marketplace.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).