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Monetary Magic: How Contactless Credit Cards Work

Beep!  You tap your Mastercard for the third time today. You didn’t even think about it. Or at least if you did, it’s only because it is the third time and you might wanna cut back on the coffee. An elderly gentleman at the till next to you pulls some coins out of his pocket and slaps them down on the counter. You try and think back to the last time you paid with cash—you don’t remember. You do remember the days before tap though, and how some of your favorite retailers were a little slow to catch on. 

Most of your transactions now? Contactless. You do your big spending online and just tap tap away at anything under a hundred bucks in person. Easy, breezy, beautiful, credit card. But how does it all work?

Near Field Communication (NFC)

The answer is Near Field Communication, or NFC for short. 

“Do you take contactless?”

“Can I tap?”

These are phrases with which we’ve all become familiar because of Near Field Communication technology. 

But what is it exactly? 

In a nutshell, it’s a highly secure electronic transmission that allows funds to pass from your bank to a retailer in exchange for a product or service. And although most consumers don’t see beyond the simple prompt and approval message, there’s a lot going on behind the scenes enabling you to make that purchase. 

Radio-Frequency Identification (RFID)

For starters, your credit card is actually emitting radio frequency signals to tell a card terminal that it’s there. Don’t worry, when we say “near-field”, we mean really near. Like, four centimetres near. Which is why you don’t walk into a Best Buy and accidentally buy ten or twelve TVs.

 In addition to the distance requirement, these card signals also have to actually be activated by another chip (inside the card reader) and are encrypted before they pass through the air (this is so that your bank info isn’t floating around unprotected). 

 This encrypted message is unique to your card and unique to each transaction, so only your bank can decode it. These transmissions are actually so secure that you can be more worried about baddies nabbing the cash out of your pocket or stealing your information over unsecured WiFi as opposed to stealing your credit card number over the airwaves.

 In an interview with, Jack Jania, VP of product management at CPI Card Group explained contactless transactions this way: “The bank decides, ‘This is one of my cards, and this is one of my clients’ transactions.’ It’s a handshake between the point-of-sale terminal and the card issuer. All of this magic happens in literally 300 milliseconds.”


The result of NFC is a really convenient way to pay. The ability to tap your credit card means you can pay for something in a fraction of the time it would take to insert your chip & pin, which in turn leads to less time standing at the checkout, and less time waiting in line. And now, with companies like Apple and Android incorporating NFC technology into smartphones and smartwatches, paying is getting easier than ever before. It really is incredible to think that in the twenty-first century, we can condense our wallets to the size of a toonie and wear them on our wrist.

More About Credit Cards

If you want to know more about credit cards as a business owner and how accepting them can help boost your business, check out our blog! Helcim is a payment processor that partners with businesses to help them succeed, and we produce weekly content to help you stay up-to-date and informed on the world of credit cards.

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