It's faster than, hold on,

this and safer than this.

That quick exchange is thanks in large part to these, just a few little wires that make contactless payments possible.

Here's a look inside the tech that makes those payments both quick and secure and why tap-to-pay has taken so long to gain traction in the US.

This is the tech behind tap-to-pay.

At the heart of tap-to-pay is a technology called NFC, or near field communication, which itself is a specific form of RFID or radio frequency identification.

You might be familiar with it as a way to unlock your hotel room, for example.

NFC relies on those little wires which are actually antennas.

The antenna kind of looks like a racetrack and it's a coil of different wires and that's what's used to basically transmit the radio frequency on both sides.

This is Mike Maclennan.

He's the general manager of hardware at Square, a company that makes card readers.

And he cracked one open to show us exactly how a tap-to-pay transaction works.

Reminds me a lot of opening oysters.

Card readers also have those antennas.

This is the NFC antenna, so this is the magic of what makes NFC transactions work.

And you can see, once we pull it off, how thin the NFC antenna is.

The card and the reader are what he calls passive and active connections.

The reader is active because it has power, and can initiate radio communication on its own.

And the card is passive because it doesn't have power and needs to be near an active source to initiate that communication.

Tapping your phone works the same way, because your phone emulates the passive card.

What's happening right now is the coil in here is active and it's looking for a card, basically, anywhere within this region up here.

It's doing that, using a radio frequency specific to NFC devices, which only works at a very short range, a maximum of about four centimeters.

And when the reader finds the card, it requests the information needed for payment.

That information is stored here, in your card's chip.

One thing it stores is what's known as static data, meaning information that's the same every time you use your card.

That's things like the account number and expiration date.

It's what's sent from your card's magnetic stripe when you swipe.

But your chip doesn't just send that static data when you tap.

It also sends something called a cryptogram, a unique string of numbers the issuers use to verify that your card is valid.

What the card is doing is it's collecting information from the reader about the transaction,

about the reader specifically, and it's combining that with the the card information using its cryptographic key to create a unique number for that transaction.

That's what makes it really hard to replicate a card fraudulently is because the card needs to have a cryptographic key that lets them generate that secret code.

That information is fed through this, the payment board which sorts to the data that needs from the card and puts it all into an encrypted package.

That package then gets sent off to the main board, which then.

Sends that on to our servers, which then send it on to the networks like Visa, MasterCard, AMEX,

which then send it on to the issuer and then back with the approval message.

Once you get to this board, it's all encrypted and protected information and so anything beyond this will have a high degree of security involved in it.

All of that happens in just a few seconds, faster than inserting your chip.

So when you insert a chip card into a reader, there's a few back and forths in that communication whereas in contactless, there's just fewer back and forth.

It was just built as a more efficient, more streamlined, only the bare necessities kind of information being passed back and forth.

Card networks and security experts say that this is also more secure than other ways you can use your card.

Unlike swiping, your static data is better protected during that communication.

And because it doesn't have contact with the reader, it's not susceptible to malware that can affect chip insert transactions on rare occasions.

This tap-to-pay technology has taken off in the last few years, in part because of the push for contactless during the pandemic.

Square says such payments tripled between the beginning of 2020 and the end of 2022.

While other countries like the UK have had contactless integrated into public transportation for years, it's taken the US more than a decade to get here.

For a whole new way to pay, MasterCard introduces Pay Pass.

US first started issuing tap-to-pay cards in the 2000s.

Peter Rudegair is a Wall Street Journal reporter who covers payments and financial technology.

Different banks thought it was a cool, new technology and thought their consumers would really flock to it.

Didn't really work out just because there were few businesses that were set up to accept tap-to-pay.

US Retailers have been slow to replace payment systems, in part because they're expensive to change.

In 2022, about 55% of merchants said they accepted tap-to-pay, with others saying they were planning on implementing it.

Consumer behaviors are also difficult to change and the switch to contactless didn't feel urgent.

It's just often been described as a solution in search of a problem.

Yes, it might be convenient and yes, it might be safe, but that's not usually enough for people to switch their behavior.

The tech still has room to grow and the push to integrate it into more parts of everyday life is working in its favor.

In New York, for example, subway riders can now tap-to-pay at turnstiles.

So you have this big push to get tap-to-pay into more transportation systems and to get people used to using it every day.

And if you're gonna use tap-to-pay to get on and off the subway at least twice a day,

maybe you'll also use it for your coffee, your lunch, your drinks.

At least that's the idea that the credit card companies hope happens.

Square and other companies have also recently released to the functionality to use the NFC antenna in your phone as the active connection,

essentially putting a reader in your pocket, which could make it easier for small retailers to accept card payments.

This is showing you where it wants you to tap and so the NFC antenna on your phone is right behind this.

And so when I take my NFC-enabled credit card and I hold it over there, done, transaction complete.