Q&A Should I Use a Contactless Card?

Q: Paying for a purchase using a credit card can be confusing. From magnetic stripes, to EMV chips, digital wallets and tap-to-pay, there are so many options! I know the stripe is on the way out for security reasons, but how are EMVs and contactless cards different? And which is the better choice for me to use?

A: Two of the most common methods retailers offer are the traditional EMV chip cards and the newer contactless cards, often referred to as “tap” cards. While both serve the purpose of securely processing transactions, there are key differences between the two options. Let’s break each method down so you can make an informed decision when choosing how to pay.

What are EMV chip cards?

EMV stands for Europay, MasterCard and Visa. These cards feature a small microchip that is embedded in them, which is used to create a unique transaction code every time the card is used. This dynamic authentication helps protect against fraud, making them significantly safer than magnetic stripe cards. Most credit cards issued today are EMV chip cards.

When you insert an EMV chip card into a payment terminal, the chip generates a

transaction-specific code that cannot be reused. This process significantly reduces the risk of counterfeit fraud because, even in the unlikely event that someone were to intercept the data, it would be useless for any future transactions.

What are contactless (tap) cards?

Contactless cards utilize near-field communication (NFC) technology to make payments by simply tapping a card on a compatible terminal. While many contactless cards also have an embedded EMV chip, the difference lies in how the data is transmitted. Instead of physically inserting the card into a reader, the card sends an encrypted signal wirelessly to the terminal.

This “tap” method is especially popular for smaller transactions, as it speeds up the payment process and reduces physical contact. Like EMV chip transactions, contactless payments create a unique code for each transaction, ensuring the data is secure.

Should I use an EMV or contactless card?

When it comes to security, both EMV chip and contactless cards are designed to be secure. They both use dynamic data authentication to protect from fraud. However, they have slightly different use cases:

  • EMV chip cards. These are generally used when a higher level of security is needed, such as during transactions where you may be required to enter a PIN. They are also used in environments where contactless technology might not be available or is less reliable.

  • Contactless cards. These offer unparalleled convenience and speed. They’re ideal for low-value transactions where entering a PIN might slow you down. While they are just as secure in terms of encryption and tokenization, contactless payments may have a set transaction limit for no-PIN use, which can be a minor security trade-off. However, for most consumers, the benefits far outweigh the risks.

Which method is safer?

Both methods are robust when it comes to protecting your financial information. The EMV chip’s security lies in its dynamic code generation, which has been proven to reduce fraud for

in-person transactions. Contactless payments, while similar in technology, add another layer of convenience by minimizing physical contact.

One notable security advantage of contactless cards is that they limit the number of transactions you can make before a PIN is required, adding an extra safeguard for higher-value purchases. Additionally, the use of tokenization in both systems means that your actual card number isn’t transmitted during the transaction, which further increases security.

Understanding the differences

The primary difference between the two methods is in how they’re used:

  • Insertion vs. tapping. With an EMV chip card, you insert the card into a terminal and may need to wait a few seconds for the transaction to process. With a contactless card, you simply tap the card on or close to a reader and the transaction is completed almost instantly.

  • Use cases. EMV chip transactions are favored in scenarios that might require additional authentication, such as at ATMs or for higher-value transactions. Contactless cards are best for quick, everyday purchases like coffee or transit fares, where speed is of the essence.

  • User experience. If convenience and speed are important to you, contactless cards can be a game changer. However, if you’re in an area where contactless technology is not fully adopted, the EMV chip card can be a great option.

Erin Hill