Every time you tap your card at a checkout, a remarkable technological exchange happens in milliseconds. Your card communicates wirelessly with the payment terminal, authenticating your identity and authorising the transaction without any physical contact. This technology has transformed how Australians pay, but few truly understand how it works beneath the surface.
Understanding the technology inside your cards helps you make informed decisions about security, card holder choices, and how you manage your everyday carry. This guide breaks down the technical concepts into plain language, explaining exactly what happens when you tap.
The Basics: What is RFID?
RFID stands for Radio-Frequency Identification. It's a broad category of technology that uses electromagnetic fields to automatically identify and track tags attached to objects. RFID has countless applications beyond payment cards, from inventory tracking in warehouses to pet microchips to building access systems.
An RFID system consists of two key components:
- A reader (or interrogator): This device emits radio signals and receives responses
- A tag (or transponder): This contains a microchip and antenna, embedded in the card or object being identified
When a tag enters the reader's field, the radio signal powers the tag's chip (in passive systems like payment cards), which then transmits its stored information back to the reader. This entire exchange happens without batteries in the tag and without physical contact between the devices.
Passive vs Active RFID
Payment cards use passive RFID—they have no internal battery and are powered by the reader's electromagnetic field. Active RFID tags have their own power source and can transmit over much longer distances, but aren't practical for the slim cards in your wallet.
NFC: The Specific Technology in Your Cards
NFC stands for Near Field Communication. It's a specialised subset of RFID technology, standardised specifically for short-range communication between devices. When people talk about contactless payments, they're specifically referring to NFC.
Key NFC Characteristics
- Operating frequency: 13.56 MHz (internationally standardised)
- Maximum range: Approximately 4 centimetres (intentionally short for security)
- Data transfer speed: Up to 424 kbits per second
- Communication: Two-way (both devices can send and receive data)
The extremely short range is a deliberate security feature. Unlike general RFID systems that might work over metres, NFC requires your card to be essentially touching the reader. This physical proximity requirement provides inherent security—you can't accidentally pay from across the room.
NFC Operating Modes
NFC devices can operate in three modes:
- Reader/Writer mode: The device reads or writes to an NFC tag (like when your phone reads an NFC tag)
- Peer-to-peer mode: Two NFC devices exchange data (like Android Beam, now discontinued)
- Card emulation mode: The device acts as a contactless card (like Apple Pay or Google Pay on your phone)
Payment cards operate in a simplified version of card emulation mode—they respond to terminal readers with their payment credentials.
RFID vs NFC Summary
- RFID is the broad category; NFC is a specific type
- NFC operates at 13.56 MHz with very short range
- Payment cards use NFC specifically
- The terms are often used interchangeably but aren't identical
Inside a Contactless Payment Card
Your contactless card contains several components working together:
The Antenna
A thin wire coil embedded in the card's plastic, usually running around the card's perimeter. This antenna receives the electromagnetic field from the payment terminal and uses it to power the chip. It also transmits the chip's response back to the terminal.
The Chip (Integrated Circuit)
The microprocessor that stores your card data and handles cryptographic functions. Modern payment chips are sophisticated computers in miniature, capable of generating unique transaction codes and implementing security protocols.
The Contact Plate
The visible gold or silver contacts on your card provide an alternative communication method when the card is inserted into a reader rather than tapped. Both the contactless antenna and contact plate connect to the same chip.
Dual-Interface Cards
Most modern payment cards are "dual-interface," supporting both contactless (tap) and contact (insert) transactions. The same chip handles both, switching modes based on how you present the card. If contactless fails, inserting your card provides a fallback.
The Transaction Process Explained
When you tap your card, here's what actually happens, step by step:
1. Field Detection
The payment terminal continuously emits a low-power electromagnetic field. When your card enters this field (typically within 4cm), the card's antenna captures enough energy to power the chip.
2. Card Activation
The powered chip wakes up and begins communication protocols. It identifies itself as a payment card and indicates readiness to process a transaction.
3. Application Selection
Some cards contain multiple payment applications (like a combined Visa and Eftpos card). The terminal and card negotiate which application to use based on merchant preferences and card capabilities.
4. Data Exchange
The terminal sends transaction details (amount, merchant information, transaction type) to the card. The card's chip processes this information.
5. Cryptographic Processing
This is where security happens. The chip generates a unique cryptogram—a one-time code—using the transaction details and secret keys stored in the chip. This cryptogram proves the card is genuine and approves this specific transaction.
6. Response Transmission
The card transmits the cryptogram and other required data back to the terminal. This happens in milliseconds.
7. Authorisation
The terminal sends the transaction data (including the cryptogram) to the payment network for authorisation. The network verifies the cryptogram using its own copy of the secret keys and approves or declines the transaction.
What Isn't Transmitted
Your PIN is never transmitted during contactless transactions under the limit. Your full card number is transmitted, but it's useless without the unique cryptogram. The secret keys that generate cryptograms never leave the chip—they can't be extracted even by reading the card.
EMV and Payment Security
EMV (Europay, Mastercard, Visa) is the global standard for chip-based payment card technology. Understanding EMV helps explain why contactless payments are remarkably secure.
Dynamic Data Authentication
Unlike magnetic stripe cards that transmit the same static data every time, EMV chips generate unique data for each transaction. Even if someone intercepted a transaction's data, they couldn't use it for another transaction—the cryptogram is mathematically tied to that specific transaction's details.
Tokenisation
Mobile payment systems like Apple Pay and Google Pay add another security layer. Your actual card number is never stored on your phone. Instead, a token (a substitute number) is used for transactions. Even if someone accessed your phone's payment data, they'd have a useless token, not your real card number.
Transaction Limits
In Australia, contactless transactions over $200 require PIN verification or may be declined for contactless entirely. This limits potential fraud even if a card is stolen.
The Technology in Your Card Holder
Understanding NFC technology helps explain how RFID-blocking wallets work and when they're useful:
How Blocking Works
RFID-blocking materials create a Faraday cage—a conductive barrier that prevents electromagnetic signals from passing through. Metal card holders provide this naturally. Lined wallets use thin metal layers or metallic thread woven into the material.
Practical Implications
- Fully blocked wallets: You must remove your card to tap, adding a step but providing complete isolation
- Partially blocked designs: Some wallets block internal cards while leaving a front pocket unblocked for your primary payment card
- Transit card considerations: If you use Opal, Myki, or other transit cards, you may want them in an unblocked position for convenience
The technology built into your payment cards represents decades of security engineering, designed to make contactless transactions both convenient and secure. While no system is perfect, the combination of short range, encryption, unique transaction codes, and transaction limits makes contactless payment remarkably safe for everyday use.
Your card holder choice can complement this security—or simply stay out of the way. Either approach works, as long as you understand what's happening each time you tap.