What are contactless payments?

8 min read
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Contactless payments, historically, haven’t gained real traction in the United Kingdom. But COVID-19 is changing that. Credit card issuers are increasingly introducing contactless payment methods, following the coronavirus pandemic.

Contactless payments are a faster, more convenient, secure, and sanitary payment method than swiping a credit card. Let’s look at the types of contactless payments available, how they can better protect consumers, and the future of this payment method.

What are contactless payments?

Contactless payments include any payment method that allows customers to check out without having to swipe a card or hand cash to another person. Instead, contactless payment methods use near-field communication (NFC) or radio-frequency identification (RFID) to complete transactions.

Contactless payments occur in two forms:

  • Through a smartphone or wearable mobile device, via mobile wallet or app

  • Through contactless technology embedded within a credit card

If a merchant’s check-out terminal has contactless technology, customers can hold their contactless payment form—whether that be a credit card or smartphone—near the terminal to complete the transaction. The convenience and added security for customers may well prove to be a draw for all types of retailers. Especially today, as consumers consider ways to prevent the spread of germs amid the coronavirus.

Contactless payments vs. mobile payments

While mobile payments are technically contactless, contactless payments commonly refer to in-person transactions made in close proximity but without physical contact. Typically, consumers make contactless payments at a point of sale and rely on technology that works at close distances. Mobile payments use cellular or Wi-Fi networks and don’t require close physical proximity to enable payments.

The history of contactless payments

Contactless payments aren’t new, but they are becoming the new normal for purchases.

Contactless payments aren’t new, but they are becoming the new normal for purchases. The technology that serves as the basis for contactless payments has developed over the decades to become more convenient, useful, and secure. To understand the evolution of contactless payments, you first need to look at where it started.

The integrated circuit chip technology that enabled the first chip cards has been in use since the 1960s. The Europay Mastercard Visa (EMV) standards for smart card specifications were developed in the 1990s. EMV chip cards and equipment were widespread throughout many European countries but implemented in the United States in 2014.

Contactless payment technology has come a long way from fobs, and contactless phone payments are no longer strictly used by early adopters. This technology is now integrated into our lives and used widely. 

With the advent of the coronavirus pandemic, contactless payments have surged in popularity. Merchants are taking measures to ensure customers feel safe and protected while shopping, so contactless payments have seen a significant rise. Strict transaction limits were traditionally imposed on contactless payments in response to COVID-19. 

Contactless payment methods allow customers to complete transactions without risking themselves, helping both the business and consumers. As businesses can help customers prevent infection, making an effort to offer contactless payments may improve your bottom line.

How do contactless payment systems work?

This technology isn’t new, but the ins and outs of this transaction process are new for many. There are two aspects of contactless payments: the payment system and the payment method.

Payment system: NFC technology, a type of radio frequency identification (RFID), is the key to contactless payments. This advanced form of radio signal technology allows for short-range transmissions, which, in this case, receive data from your card or phone.

This technology allows your phone or card and the payment system to communicate with one another to complete the transaction.

The contactless payment system is an NFC reader, which communicates with the payment method once it’s within one or two inches. Once the NFC reader collects the data from your payment method, it transfers that data to the merchant’s point-of-sale system.

Payment method: For the other half of the equation, let’s look at how the payment method works. Contactless cards have a built-in antenna and chip to pick up signals from NFC readers. When a consumer puts the card over the payment system, it will communicate with the card reader via radio signal and process the payment.

For mobile device NFC payments, the technology is built into the phone’s capabilities, so it communicates with the payment system the same way.

How to use a contactless credit card or debit card

It’s easy to use a contactless credit or debit card. Customers with a contactless-enabled payment card can follow these steps to complete payment:

  1. Look for the contactless symbol on your card and the merchant’s checkout terminal.

  2. Hold the card within a few inches of the contactless symbol.

  3. If your purchase is approved, you’ll hear a beep or see a checkmark or green light.

This process should take about 10 to 15 seconds for quick payments. Provide clear instructions at your checkout terminal to help consumers use this technology, especially if you haven’t offered this type of transaction.

How to use a phone for contactless payments

Customers can use a smartphone or cards to complete a NFC payment. They first need to set up their digital wallet (Apple Pay, Google Pay, etc.) with card or bank account information.

This process is fairly simple. Download a wallet app and add your card or bank information. Once your card or bank information has been verified, you can start using your mobile phone to make contactless payments.

If you’re using your phone as your contactless payment method, you may need to unlock your mobile wallet (usually using your phone’s face scan feature). Then hold the phone in front of the reader. Wait for the reader to beep or signal, confirming your payment has been accepted, and your transaction is complete.

What are the benefits of contactless payments?

Contactless payments have many benefits for cardholders and business owners. Some of the most notable benefits of contactless payment methods include health and safety, security, speed, and convenience.

Health and safety

Amid the coronavirus pandemic, sanitisation and safety have become more important than ever, especially when it comes to being out in public. Contactless payments reduce hygiene-related risks associated with cash, credit card, and debit card transactions.

Contactless payments allow customers to touch one less surface when shopping and maintain their physical distance by not exchanging payment with the cashier. And with cards and payment terminals coming up as surfaces that COVID-19 can live on, going contactless may be an important health and safety measure.


Security is a key concern for consumers when it comes to payments. But contactless payments impose no more risk of fraud than physical card payments. Unlike magnetic stripe cards, contactless payments use sophisticated data encryption and masking to keep your information safe.

Each time you use your card for contactless payment, a unique series of numbers masks your card number, preventing cyber thieves from getting your credit card information. With these security measures in place, using contactless payment methods is reasonably safe.


Customers don’t even have to insert their cards anymore. Instead, they hold their card over the terminal. Payments complete instantly, so checkout is that much quicker. In today’s society, the valuable seconds or even minutes cardless payments save can improve the customer experience.

With more people transitioning to contactless payment options, it could even mean an overall reduction in lines and wait times.


Contactless payments are convenient because they eliminate the need to have your card on you. If you have your mobile wallet set up on your phone, you never have to worry about forgetting your card.

It also means no more rifling through your bag or wallet to find your card. And let’s face it, many of us have scrambled with our cards, feeling impatience radiate off the next customer in line. When you consider the per-person amount of time wasted in this process, it can add up and hold up the line.

Overall, contactless technology has made payment quicker, safer, and more convenient.

Which credit card issuers are using contactless payments in the United Kingdom?

According to the Mastercard survey, 79% of consumers are using contactless payments. So there’s a significant demand for contactless payment options anywhere consumers spend money.

That demand is being met with a quickness. Virtually every major credit card issuer in the country has either already offered contactless card payment or has announced their intentions to make such technology available.

From self-checkout stations and cash registers to contactless payment systems on restaurant tables, contactless checkout is only growing in popularity. If you haven’t already gotten on board, it may be beneficial to do so.

You may not own a particular card outfitted with this contactless payment technology. But you may still choose to add that card to a mobile wallet on your smartphone. As long as the merchant accepts contactless payments, you’ll be good to go.

No-touch payment has proven to be an easy and safe way to pay. With contactless payments, we can expect a more streamlined and sanitary purchase experience—one that may become more widespread as merchants jump on board.

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