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What are contactless payments and how do they work?

6 min read

Since they arrived in 2007, contactless payments have become increasingly commonplace in shops and businesses thanks to their speed and convenience over other methods, such as cash or chip and PIN.

But what’s the current limit for a contactless payment, and what gadgets make these transactions possible? Find out all this and more in our handy guide.

What is a contactless payment?

A contactless payment (or ‘paying with contactless’) provides a quick way to pay for goods or services face-to-face, such as in a shop or cafe. Unlike traditional chip and PIN, which requires the customer to insert their card and enter their Personal Identification Number (PIN), contactless just requires a tap. The customer holds their bank/credit card, smartphone or smart watch within four centimetres of a contactless payment terminal.

The terminal sense the contactless card and reads the information contained, and completes the transaction. These machines often make a beeping sound to show the payment has gone through.

They’re called contactless payments because a store’s point-of-sale (POS) terminal (the card machine) doesn’t have to come into direct contact with the customer. That made them particularly popular during the Covid-19 pandemic, when shop workers and the public were encouraged to reduce physical contact.

Since then, further advancements in the technology have enabled the smartphone to be used as a contactless-only payment terminal. We call this Tap to Pay.

How do contactless payments work?

Here’s how to do a contactless payment in three easy steps:

  1. The customer looks for the contactless symbol at the till or in the shop window. This shows that the business uses contactless payment devices.
  2. When prompted, they hover their card within four centimetres from the reader, usually for a couple of seconds (some tap their card/device on the card reader). As well as cards, smartphones or smartwatches linked to their bank/credit account work the same way.
  3. The contactless card reader should beep to indicate that the customer’s card, smartphone or wearable has been read.
  4. For certain card transactions, such as high value sales, the customer may be asked to enter their PIN.

What devices can you use to make contactless payments?

It’s not just bank cards that can make contactless payments. Here are the most common contactless ways to pay:

  • Contactless bank cards. The use of contactless card payments continues to surge as Brits take full advantage of their convenience and flexibility. Back in 2015, only 3% of all payments were accounted for by contactless cards, according to UK Finance. But the figure reached 19% in 2018, before jumping again to 32% during 2021.
  • Wearable technology. From bracelets and keychains to fobs and jewellery, there are lots of stylish ways to make a contactless payment. These gadgets can easily be linked to the user’s card or bank account to make payments.
  • Mobile contactless payments. Smartphones and smartwatches on platforms like Apple Pay and Google Pay use passcodes, face ID and fingerprint scans for authentication. This removes the need for a physical bank card. Apple Pay is available on selected Apple devices, and Google Pay on selected Android devices. In both cases, retailer limits may apply.

Benefits and limitations of contactless payments

Contactless technology has many benefits over other payment methods but also some limitations that are aimed at keeping you safe.


  • Speeds up payments at the checkout and reduces queuing times.
  • Improves hygiene, with less physical contact required.
  • No extra processing fees to pay vs. chip and PIN.
  • Meets the expectations of customers in our increasingly digital world.
  • Digital wallets and wearables now mean customers don’t need their physical card for everyday shopping.
  • No change to calculate or rummage for, as with cash payments.


  • Lack of trust. Less digitally aware customers may prefer more traditional payment methods, which may mean providing more help at the point of sale.
  • Spending limits apply, meaning not every purchase can be contactless.

What is the limit for contactless payments?

The payment limit for contactless transactions in the UK currently stands at £100. Before October 2021, the limit was much lower, at just £45. And prior to the first Covid-19 lockdown, it was only £30.

Some mobile payment platforms allow limitless transactions, though not every retailer accepts these types of digital wallet payments.

Why is there a contactless payment limit?

This limit is designed to keep customers safe and prevent fraud in case of their card becoming lost or stolen. Payments above this amount require some form of cardholder verification, such as chip and PIN.

The customer’s bank or card issuer can also impose other limits, for example the total number and/or value of consecutive payments that can be made before requiring chip and PIN.

Digital wallet payments such as Apple Pay and Google Pay can allow customers to make payments at much higher amounts. This is because they use fingerprint, face or PIN verification on the customers smartphone to securely verify the customer.

What happens when the limit is triggered?

On a traditional card terminal, the customer will likely hear a double beep in a lower tone to that of a successful transaction. The card terminal will then prompt for the card to be inserted to complete the sale as chip and PIN.

This may present a problem in some scenarios where the terminal can only accept contactless or does not have a chip reader. Tap to Pay is an example of this.

When this happens, the customer will still hear the double beep. However, with no card reader they would be asked to either try another card or even better to use a mobile wallet such as Apple Pay or Google Pay to complete the transaction. Mobile wallets include security to verify the customer as part of the transaction, such as fingerprint recognition.

What technology do contactless payments use?

A contactless payment involving a credit or debit card uses radio frequency identification (RFID) technology. It means a contactless card comes with a built-in antenna and chip that emit radio waves. The contactless terminal in a shop receives a signal from the card that helps to process each payment.

Contactless payments using a mobile phone or wearable use near-field communication (NFC) technology, which builds on RFID. Each mobile device includes a chip that enables the digital transfer of information from the gadget to a contactless card reader.

Are contactless payments safe?

Contactless was built upon much of the same technology as chip and PIN. The main difference being that for smaller value amounts, contactless payments made with traditional credit/debit cards typically do not require cardholder verification.

As technology has advanced, so has the security. Faster networks now mean most contactless payments are authorised by the customer’s bank in real time. This helps to protect all parties from the risk of fraud if a card falls into the wrong hands.

Additionally, many cards (but not all) now support the entering of a PIN alongside a contactless “tap”. This works by encrypting the PIN and sending it the customers bank to verify the person making the payment is authorised to do so.

Mobile wallets can also support a PIN or biometrics to verify the payment.

All of these methods help to keep contactless payments secure as well as quick and convenient.

Related content

Want further information about how to pay contactless? Take a look at our other guides:


This has been prepared by Tyl by NatWest for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.

Tyl by NatWest makes no representation, warranty, undertaking or assurance (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided.

Tyl by NatWest accepts no liability for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

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