Near Field Communication Credit Cards

Near Field Communication (NFC) is a key element of contactless credit card and mobile payments. Read this guide to find out what it is, how it works and the way it affects your accounts.

Making tap-and-go payments with a credit card or mobile service such as Apple Pay is becoming more and more common. More than 50% of all in-store payments in Australian are now made with contactless credit cards according to multiple reports from key stakeholders including Westpac, Mastercard and Visa.

But for consumers, there’s still some uncertainty about how contactless payments work and the way they could affect our credit cards and accounts. This guide explains everything you need to know about the technology used for most tap-and-go options (NFC) so that you can understand what goes on when you use your card or phone to make a payment.

What is NFC?

NFC, or Near Field Communication, is a type of technology that allows wireless communication between devices that are a few centimetres apart. It doesn’t require an Internet connection, and instead uses microchips to transmit data via shortwave radio frequencies.

When one NFC-enabled device is close enough to another NFC device, a connection can be established and data shared between them. For example, when you tap your credit card on a contactless card reader or when you use a transport card to catch a train or bus. In both these cases, the card communicates data to the reader to initiate and complete the transaction using NFC technology.

How is NFC technology used in contactless credit cards?

There are currently two main brands of contactless credit cards in Australia: Mastercard PayPass and Visa payWave. American Express also provides Australian credit cards that are simply branded “Contactless” and carry the universal contactless symbol.

All of these options have NFC microchips embedded in the cards. These chips allow the cards to communicate payment data to contactless card readers so that payments can be processed.

Another feature of contactless credit cards is that transactions under $100 don’t require PIN verification. Instead, you can literally just “tap and go”.

Contactless payments are generally much faster than traditional payment options. The Smart Card Alliance, a US-based industry body, reports on its website that contactless card payments can speed up the checkout process by 30-40%. Research from American Express has also found that contactless transactions are 63% faster than cash and 53% faster than using a traditional credit card.

Contactless mobile payments

There are many mobile devices that also allow you to make tap-and-go payments. Banks have been experimenting with this option for a few years in Australia, with ANZ, CommBank and NAB among the key players to launch internal contactless payment apps for phones.

But it was the launch of Apple Pay in late 2015 that really amped up awareness of contactless mobile payment options. Apple’s service has been followed by Google’s Android Pay and Samsung Pay, which both launched in mid-2016.

There are also plans for the launch of other contactless mobile options in the near future. The features and requirements for these services vary, so we have outlined individual details for Apple Pay, Android Pay and other contactless mobile payment options below.

Apple Pay 

Apple Pay allows you to use an iPhone or Apple Watch to make payments at the checkout by tapping it against the contactless reader. The key details and requirements for this service are:

• You must have a compatible smartphone or Apple Watch. Apple Pay is available on the iPhone 6, iPhone 6 Plus, iPhone 6s, iPhone 6s Plus and iPhone SE. These devices have an innovative Near Field Communication antenna that allows contactless payments to be made. Apple Pay can also be linked up to an Apple Watch using any of the iPhones listed above, as well as or the iPhone 5, 5c and 5s.

• Your financial institution has to support the mobile payment option. Apple Pay is currently supported by American Express and ANZ. Apple has also stated it will continue to work with financial institutions in Australia and will update the Apple Pay site as participating banks are added.

• You have to download the app. If you have a compatible device and bank, then you can download the Apple Pay app and set up your account and payment options.

• Payment details and security. To make payments from your iPhone or Apple Watch, you’ll need to store your credit card or other payment details on the app. Apple Pay creates a virtual account number to represent your card details and keep your personal information safe. You also need to use your fingerprint or a secure code to verify your Apple Pay purchases.

• Your credit card or debit card must be supported. While Apple Pay is designed to work with any contactless credit or debit cards, not all products from the participating banks are compatible with Apple Pay. For example, ANZ Mastercard, Access and Corporate cards are currently not available through the service, while most ANZ American Express and Visa credit or debit cards are supported. Apple recommends you contact your card issuer to determine your card’s eligibility.

Once all of these factors have been addressed, you can start using your iPhone or Apple Watch to make purchases in stores that accepts contactless payments. To make a payment, hold your iPhone near the contactless reader with your finger on Touch ID. Alternatively, double-click the Home button when your iPhone is locked to access Wallet and follow the prompts to make your purchase.

Android Pay

Google’s Android Pay uses the NFC chip found in most Android phones to allow you to make tap-and-go payments at the checkout. Here are details and requirements you need to know for this service:

• You must have a compatible smartphone. Android Pay is available on most smartphones that run with Google’s Android operating system, including those made by LG, Samsung and HTC.
• Your financial institution has to support the mobile payment option. Android Pay is supported by more than 25 Australian banks and financial institutions, including American Express, ANZ, Macquarie Bank, People’s Choice Credit Union and Teachers Mutual Bank. Google has also said more banks will be added in the coming weeks and months, with Bendigo Bank, ING, St.George and Westpac among those listed as “coming soon”.
• You have to download the app. If you have an eligible smartphone and participating bank, you can download the Android Pay app and get it set up for payments.
• Payment details and security. Add details of your eligible credit or debit card to the Android Pay app to start making payments from your phone. You’ll still get the same benefits and security features that you would if you used the card for a payment, including any rewards and fraud protection services linked to your account. To protect your details further, Android Pay uses a virtual account number to represent your account information when you make a payment.
• Your credit card or debit card must be supported. Android Pay works with most American Express, Mastercard and Visa credit and debit cards offered by the participating financial institutions. It is also planning to launch on EFTPOS cards in the future. Check out the full list of banks and institutions offering Android Pay with our comparison guide to see if your account is currently eligible.

You can use Android Pay in major stores where contactless payments are accepted, including Myer, Coles and 7-Eleven. Google has also announced that Apple Pay will soon be compatible with popular apps including Catch of the Day, Deliveroo, Domino's and Kogan.com.

Samsung Pay

Samsung Pay uses the NFC chip in most Samsung Galaxy devices to allow you to make contactless payments. It also uses MST (Magnetic Secure Transaction) technology for contactless payments from some devices when available. Here’s what you need to know to start using Samsung Pay:

• You must have a compatible device. Samsung Pay currently works with the following Samsung Galaxy smartphones and tablets: Galaxy S6, Galaxy S6 edge, Galaxy S6 edge+, Galaxy Note 5, Galaxy S7 and Galaxy S7 edge.

• Your financial institution has to support the mobile payment option. Samsung Pay is currently supported by American Express and Citi, with plans to add more banks in the future.
• You have to install the app. If you have an eligible smartphone and participating bank, go to the home screen and select “Apps”. Find Samsung Pay and select “Install” then follow the prompts to complete the process.
• Payment details and security. You can add details of your eligible card to Samsung Pay in a few moments by opening the app, selecting “Add” and aligning your card with the camera on your device. Alternatively, you can manually enter your card details. You’ll still get the same benefits and security features that you would if you used the card for a payment, including any rewards and fraud protection services linked to your account. Samsung requires fingerprint authentication or a nominated PIN for details in the app to be accessed or for payments to be made. It also replaces your payment information (such as the card number, expiration date and security code) with a device-specific token to protect these details. Samsung KNOX software will also monitor your device and disable Samsung Pay if a threat is detected.
• Your credit card or debit card must be supported. Samsung Pay is currently only available on personal and corporate cards issued directly by American Express, or on consumer credit cards issued by Citi. Check out our comparison guide for a full list of supported cards.

You can use Samsung Pay to make contactless purchases in stores where American Express issued cards and Citi Mastercard and Visa cards are accepted. To make a payment, swipe up on your phone and hold it close to the contactless reader. Note that some stores, such as McDonald’s, and merchants using Commonwealth Bank's Albert POS terminal system do not currently accept American Express NFC payments through Samsung Pay.

Other contactless mobile payment services in Australia

A number of financial institutions in Australia have also released their own mobile contactless payment options. These services are available for customers with compatible smartphones that have NFC capabilities, and include:

• ANZ Mobile Pay. This app works on smartphones that use Android 4.4 or above as their operating system. You can store multiple ANZ credit cards and debit cards on the app, and can choose to make payments by “waking” your phone, or by launching the app. You can also choose to have a passcode to verify payments in the app.
• CommBank Tap & Pay. This app for CommBank customers works on smartphones that use Android OS 4.4 or above. You can store multiple CommBank Mastercard credit or debit cards, and a PIN is required for each account to help verify transactions.
• CUA redi2PAY. CUA’s mobile payment app lets you use an NFC-enabled Android smartphone to tap and pay for in-store purchases. It works on devices with Android OS 4.4 and above, and is compatible with CUA Visa debit cards. The app is secured with a unique passcode and doesn’t store your card’s PIN or the security code on the signature panel, to help keep these details safe.
• Lombard Finance Tap2Pay. If you’re a Lombard Finance customer, you can use this app on an Android phone with OS 4.4 or above to make purchases on your Lombard account anywhere Visa payWave is accepted. It also allows you to view your available credit balance on your phone and requires a passcode to log in to the app.
• NAB Pay. NAB Pay is included in the latest version of the NAB app for Android. It can be used on Android phones with OS 4.4 or above and is available for any personal NAB Visa debit cards or credit cards. To make a payment, you just click the NAB Pay button at the bottom of the NAB app screen, and tap your phone against a contactless card reader. You can set up a passcode for the app to make it more secure than using a card.
• Westpac Tap and Pay. This contactless mobile payment service is included in the current Westpac Mobile Banking app. It’s available to Westpac customers with the following Samsung devices: Samsung Galaxy S7, S7 Edge, S6, S6 Edge, S6 Edge+, S5, S5 Mini, S4, Note 5, Note 4 Edge, Note 4, Note 3 and Alpha. You can pay with any Westpac personal Visa, Mastercard or American Express credit card, debit Mastercard or Westpac Altitude Business credit card by selecting the eligible accounts in the app. All mobile purchases are secure and protected by Westpac’s Fraud Money Back Guarantee.

These mobile payment options offer another level of convenience over contactless credit cards, because your payment details are stored securely on the chosen device. That means if you have a mobile payment service set up, you could actually leave your wallet in your bag or at home and just use your phone or another device to make purchases.

Are contactless payments secure?

When NFC technology was first introduced to credit cards, some media reports raised questions about its security. In particular, could someone steal your credit card data using another NFC device?

The short answer is that it’s highly unlikely that would ever happen. The information transmitted by a credit card’s NFC chip is encrypted using the same technology as regular chip-and-PIN cards to help keep your personal information safe.

This technology also requires close proximity between devices for a transaction to occur. So even if there were a device that could get your details off a contactless credit card, it would have to be a few centimetres away from your card to actually work.

Another factor to consider is that NFC card readers are extremely sensitive and usually reject transactions if more than one signal is detected. For example, let’s say you had a tap-and-go public transport card (such as the Opal card used in Sydney or the Myki in Melbourne) and a credit card in your wallet. If you went to make a payment at the checkout without removing your credit card, most readers would pick up both NFC chips and be unable to process the transaction due to the conflicting signals. So you would have to take your credit card out and tap it against the reader to complete the transaction.

This sensitivity helps ensure that your tap-and-go payments are only processed on your selected card. It also prevents accidental double-payments if you tap twice, as readers can only process one transaction at a time.

Contactless credit card theft

Physical theft is biggest security risk for contactless credit cards, because no verification is needed for transactions under $100. That means thieves could effectively use a card at many different locations to rack up hundreds and thousands of dollars in fraudulent charges. Key actions you can take to protect your credit card against theft include:

• Keeping track of where your card is at all times
• Not sharing your card with anyone else
• Regularly checking your mail for any new cards that may arrive
• Reporting lost cards immediately

Mobile phone theft or hacking

Physical theft or software hacking are the two major security threats when using a mobile phone or other device to make contactless payments. With actual theft, you can reduce the risk of your credit card or bank account details being compromised by making sure you have a strong password to unlock your phone, and by reporting theft to your mobile service provider as soon as possible.

When it comes to hacking, installing antivirus software, avoiding clicking unknown links and only storing limited payment details can help reduce the risk of criminals getting access to your device. You should also make sure you read the security policies for any contactless mobile services you use, so that you know exactly how you’re protected and what to do if something does go wrong.

Other factors to consider

Make sure you’re aware of the following factors to get the most out of using a contactless credit card or mobile service.

• Zero liability. Credit cards offer insurance policies against fraudulent charges, including those made by contactless cards. This means if your card is compromised, you should be able to get all the money back once you’ve contacted your credit card provider.
• Fraud monitoring. Most credit cards provide 24/7 fraud monitoring services to help keep your account safe under any circumstances.
• Mobile password protection. Make sure you have a strong password for any device that you use for contactless payments. That way, if your phone or tablet is stolen, it will be harder for the thief to get access and make payments.
• Surcharges. Some businesses charge extra for processing credit card payments. NFC contactless technology uses the same payment network as credit cards, so a surcharge could apply even if you use a tap-and-go debit card or mobile phone.
• Acceptance. Not all merchants accept contactless payments from cards or mobile devices. You can still use a contactless credit card to pay by swiping or inserting it into a reader that doesn’t use this technology, but won’t have that option for mobile payments.
• Contactless payments overseas. While you should be able to make contactless payments wherever you see the symbol for them, it may vary between merchants both in Australia and abroad. In some cases, you may also have to enter a PIN or sign for payments overseas, even if they are under AUD$100.

NFC technology is changing the way we pay for things at the checkout. Whether you use your card, your phone or a combination of options, understanding how this type of payment works will help you choose the right type of payment method wherever you are.

Images: Shutterstock.