RFID

• In order to use an RFID credit card, the credit card is either waved or touches an RFID credit card terminal. This sends a radio signal from the credit card to the terminal, which then processes the transaction. The radio signal needs to be within a relatively short distance from the terminal in order for the necessary information to transmit. The benefit for this technology is providing protection to the consumer. Since the credit card remains in the cardholder's possession, the risk of someone stealing information from the card is reduced.
  
  

Security Questions

• While the RFID credit card supposedly offers improved security, some people claim the technology actually offers less protection. With the right sort of equipment, individuals within a certain distance of an RFID credit card might gather data using radio frequency technology. The credit card companies, however, maintain protection by asking merchants to check the three-digit security code on the back of the card, since that information does not transmit via the radio transmission.
  
  

Additional Features

• The credit card companies incorporate additional security features with the RFID cards. One example is a random code generated which changes with every transaction. If information is stolen, the random code does not work on any other transaction. In addition, when the RFID data is transmitted to the terminal, the cardholder's name is not retained after the initial purchase, providing yet another security layer. While some individuals say that passing by someone carrying credit cards with RFID transmitters in them is a security risk, the distance in which the transmitter operates is between 1 and 4 inches. Sleeves blocking transmission signals are available for individuals looking for even more data protection.
  
  

European Adoption

• In Europe, banks can refuse transactions using the magnetic stripe technology. It is easier to commit fraud using a card with a bogus magnetic stripe than it is with RFID credit cards. This has led many European businesses to completely refuse to accept magnetic stripe cards except in cases of extreme emergencies. Adopting the RFID technology in America improves financial transactions with European and Asian businesses.