Contactless payments, also commonly known as tap or tap-and-go, offer a fast and secure way for consumers to purchase goods and services without the need to physically swipe a card or enter a PIN.
Utilizing radio frequency identification (RFID) or near-field communication (NFC) technology, this payment method allows transactions to be completed by simply tapping a contactless-enabled card, smartphone, or wearable device near a point-of-sale terminal equipped with contactless payment technology.
These systems are designed to make the checkout process more efficient while maintaining high levels of security through encrypted transactions. In this article, we discuss how contactless payments work, the different types available, pros and cons to this technology, and how to set it up.
Key Takeaways
- Contactless payment uses technology to electronically transmit payment information without having to touch a POS terminal.
- Commonly known as tap, contactless payments can be facilitated with a debit or credit card or through a payment app on your phone, smartwatch, or laptop.
- The limit for contactless payment transactions is $250.
- Setting up contactless payment is easy and can be done in a few simple steps.
- It’s a secure, speedy, and hygienic method of payment, but the purchase limit and technology dependence can be a downside.
What is contactless payment and how does it work?
Contactless payments, also known as tap or tap-and-go, use NFC or RFID technologies to enable secure payments without physical contact.
By simply tapping a contactless-enabled device or card near a compatible terminal, the transaction is initiated. NFC allows for close-range communication between the terminal and the payment device, while RFID facilitates the identification process, ensuring a quick and secure transfer of payment information.
This method streamlines the checkout process, making it faster and more convenient for users.
How to do contactless payment
Here’s how to set up and use contactless payment on cards:
- Activation: Some cards are automatically activated for contactless use, while others may require activation by making a transaction or by opting into the feature through online banking or a phone call to the bank.
- Use: Look for the contactless symbol at payment terminals and tap your card.
And here’s how to complete the set up on your mobile device:
- Settings: First ensure that NFC is enabled in your phone’s settings.
- Setup: Download the payment app (eg. Apple Pay, Google Pay, or Samsung Pay), then follow the in-app instructions to add your debit or credit card information.
- Use: Unlock your device, and hold it near the payment terminal until the transaction is complete.
To use contactless payments effectively, follow these steps:
- At checkout, look for a payment terminal with the contactless symbol.
- Tap or hold your card/device close to the terminal.
- Wait for confirmation – usually a beep, light, or notification on the terminal.
- Securely complete the transaction without entering a PIN for amounts under $250.
Types of contactless payment
Let’s take a look at the 4 most popular contactless payment methods transforming the way we transact today:
| Type of contactless payment | Details |
|---|---|
| Debit and credit cards | * Simply tap the card against a contactless-enabled terminal. * This method eliminates the need for physical swiping or PIN entry. |
| Apple Pay | * Apple Pay enables contactless payments using an iPhone, Apple Watch, iPad or Mac. * Users can securely pay for goods at a store by tapping their phone or watch, or make a purchase on their iPad or Mac without needing to fill out lengthy forms. * Apple Pay can be set up by adding a debit or credit card to the Wallet app. |
| Google Pay | * Google Pay provides a fast and simple way to make payments with your phone, tablet, or watch. * By adding your credit or debit card to the Google Pay app, you can securely pay in-store or online by holding your device near a contactless payment terminal or selecting Google Pay at checkout on websites and in apps. * Make sure NFC is enabled on your phone. |
| Samsung Pay | * Samsung Pay enables secure and convenient contactless payments by allowing users to store their debit, credit, and loyalty cards on their Samsung devices. * It distinguishes itself with its MST (Magnetic Secure Transmission) technology, which works with both NFC and traditional magnetic stripe terminals, making it compatible with a wider range of payment terminals compared to NFC-only payment solutions. * Users can simply swipe up from the home screen, authenticate with a fingerprint, PIN, or iris scan, and tap their device to the terminal to complete a purchase. |
Contactless payment advantages and disadvantages
Contactless payments have transformed the way we approach transactions, using technology to increase the convenience and speed of our daily purchases.
Here's a look at the benefits and drawbacks of adopting this modern payment method:
| Pros | Cons |
|---|---|
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Do you use contactless payment?
We're keen to hear about your journey with contactless payments. Have they streamlined your shopping experiences, or are you hesitant about adopting this technology?
Maybe you've faced challenges or have a success story to share. How do you see contactless payments fitting into the future of commerce?
Comment below with your thoughts, experiences, or any questions you might have.
FAQ
Is there a contactless payment limit?
Yes. In Canada, there’s a $250 limit on contactless payments used by tapping your debit or credit card at a point-of-sale terminal. This $250 limit also applies to Apple Pay, Google Pay, and Samsung Pay.
Is contactless payment safer than chip?
Contactless payments use one-time codes for transactions which gives them a similar level of security to chips. They’re more secure than magnetic stripes (which are prone to skimming). The main security risk for contactless payment lies in physical card theft.
What’s a contactless payment example?
A contactless payment example involves simply opening the Apple Pay, Samsung Pay, or Google Pay app and holding the device near a contactless-enabled terminal. The payment is processed without needing to physically swipe a card or enter a PIN.
How do I set up contactless payment on my phone?
To set up contactless payment on your phone, download a mobile payment app like Apple Pay, Google Pay, or Samsung Pay. Add your credit or debit card details by following its instructions. Lastly, ensure NFC is enabled on your device.
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