How do contactless payments work?

Card payments are nothing new, but over the last decade, we have shifted from paying via chip and PIN to now being able to simply tap our cards, or even phones and smart watches to pay. We’ve come a long way!

The use of contactless payments has soared, particularly within the last few years. According to a report from UK Finance.org, in 2017, the number of payments made this way in the UK increased a whopping 97%. And by the end of that year, there were 119 million contactless cards in circulation.

But have you ever wondered how these cards actually work and how your payments get processed in such a secure and easy way? 

RFID and NFC

When you hold your card up close to a machine to accept payment, it is made possible through something called RFID (Radio-frequency identification). Your cards have a special chip inside which emits radio waves through an antenna built into the plastic. The card machine then picks up this signal, allowing them to communicate with each other - pretty cool eh?

If you’re paying contactlessly through a smartphone, or even a smartwatch, these use NFC (near field communication) technology, which also uses radio frequencies. However, in this case, it is more to do with the transfer of your data (from a phone) to a card reader.

NFC technology is built into pretty much every single smartphone and can essentially turn your device into a credit or debit card.

What devices can I use for contactless payments?

It’s not just contactless cards and mobile phones that allow for this type of payment. More and more devices are now contactless friendly. This includes watches, wristbands, and even keyfobs and rings that have been developed - who knows what might come next. But this really does show how influential this type of transaction has become. 

What are the benefits to accepting contactless payments?

There are plenty of benefits when it comes to accepting contactless payments. It’s really convenient for your customers - paying for stuff is just so much easier. Customers can just tap and go, which speeds everything up and can help reduce queuing times - and we all like it when queues move quicker!

It can also help increase the average spend in your store, as customers aren’t limited to the money they have in their pocket. Plus, by accepting cards as well as cash, you are opening yourself up to pretty much everyone.

Are contactless payments secure?

Yes, they are very secure. This is because they use very similar security methods adopted for chip and PIN. 

You also can’t accidentally make a payment because a contactless payment can only happen if the card is within a few centimetres from the machine. Customers are also protected from double tapping, so they can’t be charged twice.