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All About Contactless Payments

A contactless payment is any instrument that is used to make secure payments via radio-frequency identification (RFID – “the storage and retrieval of data using tags attached to individual packages, animals or people; the tags contain an integrated circuit to store and process the data, and an antenna to transmit and receive such data” Wiktionary). The technology typically operates over short distances. Examples of contactless payment instruments include:

  • debit and credit cards
  • smart cards (also called chip cards or integrated circuit cards – These are cards with integrated circuits, small enough to fit into the pocket.)
  • key fobs
  • proximity cards
  • ISO/IEC 15693 vicinity cards

They are all popular because payments can be made faster than the more conventional ways of using cash, writing out a check or sliding a card through a machine and entering one’s PIN; these items need only be waved over the sensors to be accepted. They are thus the most attractive option for people who are often in a hurry.


The various forms of contactless payment all come with certain features that make them not only easy and convenient to use, but also secure. The cards are full of microprocessors and memory systems that have been designed to protect the user’s personal information: Each one has a unique “key” that generates a “unique verification value” for every transaction by using standard encryption technology and is never transmitted. For extra security, the cardholder’s name is not used in the transaction. It is extremely difficult, indeed, to counterfeit transactions with contactless payment.

Instead of requiring the user to swipe the magnetic stripe of the card, contactless payment involves sending the account information to the point of sale terminal via RFID. However, if the amount of the transaction is in excess of a preset limit, the holder does have to swipe the card.

Mobile Wallets

The mobile wallet is one of the novel forms of contactless payment. It involves payments being made with a smartphone under financial regulation. In 2008 it was predicted by financial experts that the amount of money spent with mobile wallets would pass the $300 billion mark by 2013.

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