More and more card readers at POS terminals now support tap to pay means of making a payment. If we are not inserting the chip end of the card, how is it providing additional security?
Edit: wow, lots of great information, thank you folks for taking the time and explaining it like I’m 5.
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The chip only stores data – it doesn’t have any on-board power.
The chip is not just data storage, though – it’s also an antenna.
Data can be read off the chip either by physically inserting it into a chip-reader, or by broadcasting the data over a very weak, short-range radio. But since the chip doesn’t have any on-board power, it needs to get off-board power in order to send radio signals. This is done by stimulating the chip with magnetic fields, which happens when you tap it against an induction pad (same principle as wirelessly charging a phone, but with way less juice). That magnetic energy is passively converted into a tiny amount of electrical power which is then used to broadcast the data on the chip via the integrated antenna.
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