How do contactless payments work?
Contactless payments have become the norm in recent years, especially with many businesses going completely cashless. But how do contactless payments work?
Estimated read time: 4 mins
In this guide, we’ll cover everything you need to know about contactless payments, and how they’ve changed the way we spend.
What is contactless payment?
Contactless payment is a secure way to pay that lets you make payments using cards or mobile devices, without physically swiping or inserting your card, or entering your PIN.
By tapping or hovering over a compatible payment terminal, money is transferred instantly, providing a quick and easy way to complete a purchase.
How do contactless payments work?
Contactless payments use a technology called Near Field Communication (NFC). Here’s how they work:
- NFC technology: Both the payment card (or mobile device) and the payment terminal have NFC chips. This allows them to connect wirelessly.
- Starting payment: To make a payment, the user taps or holds their contactless card or mobile device close to the terminal. You may only need to be a few centimetres away.
- Data transfer: When the card or device is close enough, it transmits payment info securely to the terminal.
- Authorisation: The terminal processes the payment by connecting to the bank or payment processor to authorise the transaction. This usually happens in seconds.
- Confirmation: After the payment is approved, the terminal shows a confirmation and the transaction is complete. A receipt may be provided if requested.
How do I make a contactless payment?
Making a contactless payment can be a simple and quick way to pay for things. First, make sure your card or mobile device has the contactless symbol. This is a series of curved lines. Next, check the payment terminal also displays this symbol.
If you use a mobile payment app, like Apple Pay or Google Pay, you’ll need to unlock your device. You might need to authorise the transaction with your fingerprint or PIN.
Hold your contactless card or mobile device near the terminal and wait for a beep or visual confirmation. This means your payment was successful.
If you need a record of the transaction, you can ask the cashier for a receipt. You can also check your payment history in the banking app connected to your card.
For more info, see our guide on how to use your credit card.
Is there a charge for contactless payments?
Most card providers don’t charge extra fees for contactless payments, as they’re designed to make transactions quick and easy.
It’s important to check with individual sellers, as some may have their own policies on charges.
While making payments is usually free of charge, your bank or card issuer may charge fees for some types of transactions. This can include foreign transactions or cash advances.
Always review the terms and conditions of your payment method. This helps you spot any potential charges.
How safe is contactless payment?
Contactless payment is typically considered safe and secure. This is because the payment method uses certain security features, such as:
Encryption
Contactless payments use encryption technology to protect your financial info during transactions. This means your card details should not be sent in plain text.
Limited range
The technology may need the card or device to be very close to the payment terminal. This reduces the risk of accidental payments.
Tokenisation
Systems often use tokenisation. This replaces sensitive card info with a unique identifier or token for each transaction. This can make it difficult for criminals to misuse your card details.
Fraud detection
Banks and payment providers can check transactions for suspicious activity. If unusual patterns show up, they may alert you or block transactions to prevent fraud.
User control
You keep control of your payments and must physically tap your card or device to complete a transaction.
Is there a minimum spend on contactless payments?
Many retailers set a minimum spend for contactless payments, particularly when using a card.
In the UK, the minimum spend for contactless transactions is about £1. But some places may set it higher.
With mobile payments, like Apple Pay or Google Pay, there may not be a minimum spend. This means you can make smaller purchases without restrictions.
It’s always best to check with the retailer if you’re unsure about their minimum spend policy for contactless payments.
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Frequently Asked Questions
What is the difference between contactless and Tap and Pay?
Contactless is a payment method that uses NFC technology. This lets you make transactions without swiping or inserting your card. Tap and Pay means tapping a contactless card or device on a terminal. While all Tap and Pay transactions are contactless, not all contactless payments are Tap and Pay.
Do contactless payments require PIN?
Contactless payments don’t usually require a PIN for transactions under a certain limit, often £100 in the UK. For higher amounts, you may be asked to insert your card and enter your PIN as a security measure.
Do I need an internet connection to pay with contactless?
You don’t need an internet connection to pay with contactless. The transaction uses Near Field Communication (NFC) technology, allowing payments to be made offline. Your bank may need an internet connection so you can use certain features, like checking account balances or looking at your transaction history.
How do I know if my card is contactless?
You can identify a contactless card by looking for the contactless symbol. This is a series of curved lines, usually found on the front or back of the card. Also, your card issuer may display contactless features in the card’s documents or on their website.
How does contactless payment work on a phone?
Contactless payments on a phone work using Near Field Communication (NFC) technology. When you add your card to a mobile payment app, your phone generates a secure token for transactions. By tapping the phone near a compatible terminal, payment info is sent securely, allowing for quick and easy transactions.