Contactless payments: A complete guide for businesses

Contactless payments are a secure method for shoppers to complete transactions by tapping their card or mobile device on a point of sale terminal. 

The technology behind contactless payments uses short range wireless communication to transmit payment data instantly without physical contact between the device and the reader.

You can accept contactless payments through POS terminals or mobile apps that allow customers to tap their payment card or device.

As most modern in-person payment terminals have Near Field Communication (NFC) technology, it might be pretty simple to start accepting contactless payments with your existing hardware. Your payment service provider can guide you through how to set this up. 

Check out the in-person payment terminals that we offer.

How to accept contactless payments on a phone

The most widely used solutions for contactless payments today are Tap to Pay on iPhone or Android. Tap to Pay lets shoppers make contactless purchases by “tapping” their card, phone, or compatible smartwatch. This means you can accept contactless without having to invest in new hardware which is ideal for businesses such as pop-ups.

What’s the difference between Tap to Pay on iPhone and Tap to Pay on Android?

The primary difference between Tap to Pay on iPhone and Tap to Pay on Android is that with iPhone, users tap the front screen to pay and with Android, users tap the back of the device.

Contactless payments use NFC technology which allows two devices to exchange data when placed within a few centimetres of each other. 

The process begins when the payment terminal sends out a radio frequency signal that searches for a compatible chip. When a shopper brings their card or mobile wallet near the reader, the chip activates and shares encrypted payment information to authorise the sale.

The following steps outline the technical flow of a contactless transaction:

1. The business enters the transaction amount into the point of sale system.

2. The payment terminal emits a short range electromagnetic field.

3. The shopper taps their NFC enabled card, smartphone, or wearable device against the terminal.

4. The terminal and the payment device exchange an encrypted token containing payment details.

5. The terminal sends this data to the acquiring bank for authorisation through the card networks.

6. The bank approves or declines the transaction and sends a confirmation back to the terminal in seconds.

Because shoppers tap rather than swipe or insert, hardware wears down more slowly and queues move faster.

Following are the main benefits of contactless payment:

Customer benefits of contactless payments

Contactless payments improve the customer experience by making the checkout process quicker and easier. Shoppers no longer need to carry physical wallets or handle cash, they can pay using devices they already carry. 

Business benefits of contactless payments

For businesses, the speed of contactless payments translates to shorter queues and higher throughput during peak hours, which helps prevent lost sales due to long wait times.

Businesses also benefit from increased operational efficiency. Because there is no physical contact required, hardware lasts longer and requires less maintenance. Furthermore, the digital nature of these payments reduces the errors associated with manual cash handling and simplifies end of day reconciliation.

Security benefits of contactless payments

Contactless payments are secure because they use advanced encryption and tokenisation to protect sensitive data. Every time a shopper taps to pay, the device generates a unique, one-time security code for that specific transaction. This means that even if a criminal intercepted the signal, the data would be useless for any future purchases.

Banks and card networks also implement safeguards such as transaction limits and occasional PIN requests to verify the cardholder's identity. These layers of protection ensure that contactless methods are as safe as, if not safer, than traditional chip and PIN or magnetic stripe payments.

Shoppers use various form factors to complete contactless transactions. These include:  

Contactless EMV cards

The most common method is the contactless EMV card, which features a visible wave symbol indicating it has an embedded NFC antenna. These cards allow for quick transactions without the need for a battery or internet connection on the shopper's side.

Mobile wallets

Mobile wallets represent the other major category of contactless payments. They often provide an extra layer of security by requiring biometric authentication, such as a fingerprint or facial recognition, before the payment data is transmitted to the terminal.

Immfly

Immfly previously struggled with complicated offline payments prone to fraud. To solve this, they were looking for a single provider for their entire payment process. 

With Adyen’s all-in-one devices, Immfly simplified its technical setup and made it easier for cabin crews to process sales.

The transition to Tap to Pay technology reduced the time of each transaction by five seconds, which means less waiting in the aisle and more time to assist passengers. 

Additionally, the system supports many different international payment methods. This allows passengers to use the services they prefer in their home countries, such as Alipay in China or Swish in Sweden, making inflight purchases as easy as shopping on the ground. 

Rituals

Luxury lifestyle brand, Rituals, has worked with Adyen since 2013 to bring their vision of combining technology with human interaction to life.  

Introducing Tap to Pay on iPhone brought a new level of convenience: staff could accept contactless payments directly on iPhones without the need for any extra hardware. This reduced checkout queues and kept the focus on offering personal experiences, with staff able to assist customers anywhere in the store.

During December 2024, Rituals processed 48 orders per second worldwide, with nearly 230,000 of them on thousands of iPhones. 15% of transactions on December 23 were made with Tap to Pay on iPhone, alleviating pressure on fixed cash desks and significantly reducing the holiday queues.

Adyen helps businesses accept contactless payments across all channels and regions through a single integrated platform. Our technology supports the latest NFC standards and global card schemes, ensuring your customers can pay however they choose. With Adyen, you get access to unified reporting and a consistent payment experience whether the shopper is tapping a card in a physical store or using a mobile wallet.

Our hardware and software solutions are designed to scale with your business. We provide certified terminals that are ready for contactless use out of the box and offer mobile SDKs for businesses that want to turn iPhones or Android devices into payment terminals. This flexibility allows you to meet customer expectations for speed and security without managing multiple vendors.

Get in touch to learn how to integrate contactless payments into your business today.

• Contactless payments use NFC technology to exchange encrypted data between a device and a reader.

• Transaction speed reduces wait times and improves the shopper experience.

• Tokenisation ensures that every tap generates a unique code, making the payment highly secure against fraud.

• Mobile wallets add biometric security layers to the transaction process.

• Businesses can use Adyen to manage all contactless payment methods through one platform.