Contactless payment, also known as NFC or near field communication, is a technology that allows electronic devices to communicate wirelessly. In the case of a mobile wallet application, those devices would typically be a mobile phone and a point of sale terminal at a checkout counter. (NFC has other uses beyond credit card transactions: it can integrate with hardware -- to unlock a door, for example -- or it can activate software.)
Soon enough, using your smartphone as a credit card will be commonplace. By 2015, mobile contactless payments, in which you pay by holding your phone near a payment terminal, are expected to have increased by 1,077 percent.
Contactless payments are a faster, more convenient alternative to cash when making small purchases at fast food restaurants, convenience stores, and transport terminals. They are also ideal for remote or unattended payment situations, such as vending machines, road tolls or parking meters. So far, I haven't seen a report of bad guys exploiting contactless payment systems.
There are five facts you should know about contactless payment:
- Tens of millions of people use contactless technology every day -- in passports, identity cards, and transit fare cards for secure, fast, convenient transactions.
- These transactions are protected by multiple layers of security, which protect both retailers and consumers.
- Some of these security features are incorporated within a card's microprocessor chip, while others are part of the same networks that protect traditional credit and debit card transactions.
- Regardless of your payment method, it is still essential that you check your bank statements regularly for unauthorized transactions.
- While contactless payment has been deployed in numerous settings, it is not yet available everywhere. So, assuming that you prefer not to carry large sums of cash, you'll still need to carry a traditional credit card or, if you are traveling outside of the U.S., an EMV card.