Contactless Payments
What Are Contactless Payments? Definition and How They Work
Definition
Contactless payments are card or digital wallet transactions completed by tapping a payment device, a contactless card, smartphone, or wearable, near a merchant's NFC-enabled terminal without inserting a card or entering a PIN for transactions below the applicable floor limit. Contactless payments use Near Field Communication (NFC) technology to transmit payment credentials over a range of approximately 4 centimetres.
How it works
Contactless payments use NFC technology. The payment device, a card with an embedded NFC chip or a smartphone running a digital wallet, broadcasts payment credentials when held near an NFC-enabled terminal, completing data exchange in under 0.5 seconds.
The transaction follows standard EMV flow: the terminal sends a request; the device responds with a cryptographically generated transaction code unique to that specific transaction; the terminal processes the authorisation through the acquirer to the card network and issuer. Each transaction generates a different code, replay attacks are ineffective.
Below the contactless floor limit, £100 in the UK, €50 in most of Europe, transactions proceed without PIN. Above the limit, PIN may be required; digital wallet transactions (Apple Pay, Google Pay) authenticated by device biometrics are typically exempt from floor limits because biometric authentication provides equivalent verification.
Why it matters
Contactless adoption accelerated dramatically during COVID-19 and has remained high: in the UK, contactless accounts for over 60% of card transactions. The speed of tap-to-pay, under a second versus 8–15 seconds for chip-and-PIN, reduces checkout time and queue length at high-footfall environments.
Digital wallet contactless payments provide enhanced security: the card number is never transmitted; instead a device-specific token is used, meaning a stolen NFC signal yields no usable credential. Digital wallet contactless payments have a lower fraud profile than physical contactless card transactions.
With PXP
PXP accepts contactless card and wallet payments across its in-store terminals and SoftPOS. Talk to our team about how PXP can support your contactless acceptance.
Frequently asked questions
What is the contactless limit and why does it exist?
The contactless limit is a threshold below which transactions complete without PIN entry, a fraud mitigation measure limiting the value of any single tap transaction. It varies by country: £100 in the UK, €50 in most of Europe. Digital wallet transactions authenticated by device biometrics are typically exempt because biometric authentication provides equivalent or stronger verification than PIN.
Are contactless payments secure?
Yes. Each transaction generates a unique cryptographic code that cannot be replayed. For a contactless card, the transmitted data includes the card number accompanied by a one-time dynamic cryptogram that cannot be replayed. For digital wallet payments, a device-specific network token is used, meaning the original card number is never exposed at any point in the transaction.
What is the difference between contactless card and Apple Pay/Google Pay?
A contactless card transmits the card number together with a one-time dynamic cryptogram over NFC; a digital wallet instead transmits a device-specific network token in place of the card number. Apple Pay and Google Pay store a device-specific network token provisioned through the card network's tokenisation service, neither the merchant nor anyone intercepting the NFC transmission sees the actual card number. Digital wallet payments also require device biometric authentication before the transaction, providing a second factor not present in a simple card tap.
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