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The Fascinating Technology Behind Tap-to-Pay and NFC Explained

Updated: Oct 30, 2023

From Apple iPhones to New York City subway turnstiles, the use of tap-to-pay technology in everyday life is on the rise, thanks to its security and user-friendliness.

However, beneath the surface, tap-to-pay and its small NFC (Near Field Communication) antennas are more intricate than they may appear.

Understanding Tap-to-Pay

Tap-to-pay employs short-range wireless technology to facilitate secure transactions between a contactless card or payment-enabled mobile/wearable device and a contactless-enabled checkout terminal.

When you tap your card or device near the Contactless Symbol, your payment is transmitted for authorization.

Remarkably, your card or payment-enabled device only needs to be within 1 to 2 inches of the Contactless Symbol to initiate the payment.

The Core of Tap-to-Pay: NFC Technology

At the heart of tap-to-pay is NFC, a technology that stands for Near Field Communication.

It's a specific form of RFID (Radio Frequency Identification) with which you may already be familiar. For example, NFC is used in hotel key cards to unlock your room.

NFC relies on minuscule wires that act as antennas. These antennas resemble a racetrack and are essentially coils of different wires. They transmit radio frequencies on both ends of the transaction.

Your credit card is passive, while the reader is active. The reader has the power and actively seeks a passive source to initiate the transaction.

How the Transaction Works

One thing stored in your card is static data, which includes information that remains the same each time you use your card, such as the account number and expiration date.

This data is what your card's magnetic stripe sends when you swipe it. However, when you tap your card, it doesn't just send this static data.

It also sends a cryptogram, which is a unique string of numbers used by issuers to verify your card's validity.

Here's where it gets interesting.

The card collects information from the reader about the specific transaction and the reader itself. It then combines this information with its cryptographic key to create a unique number for that transaction.

This complexity makes it extremely challenging to replicate a card fraudulently because the card must have the cryptographic key to generate that unique code.

The information goes through a payment board, which extracts what it needs from the card, encrypts it, and packages it.

This package is then sent to the main board, which forwards it to servers and networks like Visa and Mastercard, who then send it to the issuer and back with the approval message. Once it reaches the payment board, all the information is encrypted and secure.

Why Tap-to-Pay is Secure

Experts assert that tap-to-pay is more secure than other payment methods, as your static data is better protected during the communication process.

Since there's no direct contact with the reader, it's not susceptible to malware that can affect chip insert transactions.

In recent years, tap-to-pay technology has gained momentum, especially during the pandemic, as the demand for contactless payments surged.

Square reports that such payments tripled between the beginning of 2020 and the end of 2022. Although countries like the UK integrated contactless payments into public transportation years ago, it took the US more than a decade to embrace this innovative payment method.

The introduction of the pay pass by MasterCard and the issuance of tap-to-pay cards in the 2000s marked the initial steps towards the tap-to-pay revolution.


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