How Contactless Payments Work

How Contactless Payments Work
Photo: Shutterstock

As we get used to the new “normal” of shopping during the coronavirus outbreak, you’ve probably seen businesses advertising contactless transactions.

At a lot of shops and restaurants, that means you pay online before picking up your order curbside or at a pickup spot that doesn’t require you and the employee to exchange anything by hand.

But contactless transactions also refers to the in-person payment method that allows you to pay without inserting your card into a terminal or handing it to a cashier. And its use has exploded since our activities have been restricted by the coronavirus.

Contactless transactions saw more than 40% growth worldwide in the first quarter of the year, according to Mastercard.

And contactless transactions grew twice as fast as non-contactless ones for grocery and drugstore purchases—some of the only places many of us have shopped in person in recent weeks—based on a survey conducted by the payment network in February and March.

Contactless payment can take place on a debit or credit card, but can also be connected to your finances through another method like a key fob, smartwatch, or mobile wallet on your phone.

Nearly 80% of respondents around the world said they now use contactless payments, with safety and cleanliness as top motivators for choosing contactless over other payment methods.

So what should you know before you shop?

Review your wallet

First, determine your options for contactless payment. If you already use a mobile wallet like Apple Pay or Google Pay, you’re probably already set up to use your mobile phone for contactless payments from the accounts you’ve linked to those services.

If you’re paying with plastic, you’ll want to check on either side of your card for a symbol that looks like a sideways WiFi signal. That means your card has contactless payment capability.

Look for this symbol somewhere on your credit or debit card. (Photo: Lisa Rowan)

Check for spending limits

Your contactless card has the same spending limits as the account it’s tied to, but there may be some restrictions when it comes to the amount of your purchase.

Some card issuers and payment networks set thresholds that allow you to use contactless payment only for smaller purchases. For instance, if you use Apple Pay for a purchase of more than about $80, you’ll need to sign for the transaction.

In Great Britain, the contactless limit has increased from around $50 to $70 to accommodate physical distancing efforts, while in Canada the cap has been raised from around $100 to $380.

Follow instructions at the register

If you’ve never completed a contactless payment before, look for that sideways Wi-Fi symbol on the payment terminal—but you can also expect that businesses will be shouting pretty loud and clear about their ability to accept contactless payments.

While it’s sometimes referred to as “tap to pay,” keep in mind that your card or mobile device doesn’t actually need to make contact with the payment terminal in order for your payment to process—it just needs to hover an inch or two above it.

And it’s fast—way faster than waiting for your chip transaction to authorise. So pay attention and be ready to hustle away from the register as soon as your transaction is complete.

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