Proximity cards have long been used in other industries for access control and identification purposes. However, proximity cards are starting to show up in surprising places. Credit cards, which have long used magnetic stripes to retain customer data, are beginning to also employ proximity card technology.

In traditional credit card transactions, a customer presents their card to a cashier, who swipes the card through a terminal with a magnetic stripe reader (in some large retail stores and in many grocery and convenience stores, customers swipe their own cards through point of sale terminals and can choose between credit or debit functions if their card permits). The customer data is gathered from the magnetic stripe and is transmitted over a phone network to verify and authorize the transaction. To complete the purchase, a receipt stating the total of the transaction and an agreement to pay the charge at a later date must be signed by the customer.

Credit cards embedded with a proximity card chip function in a slightly different manner. These cards have both a magnetic stripe and a proximity chip. Merchants participating in proximity card programs (often dubbed “speedpass,” “speedpay” or likewise) have terminals where customers may pay using the proximity card feature on their credit card. When a customer makes a purchase, they pass their card by the proximity reader at a close distance. The proximity chip and the reader then exchange consumer and transaction information. Unlike traditional credit card transactions, proximity card transactions do not require signatures to confirm. While the transaction still must be completed over a network, the customer is not required to receive or sign a receipt like a traditional purchase.