Gravity Payments

What are Contactless Payments and How Do They Work?

Learn all about contactless payments including how they can benefit your small business, and start accepting contactless payments.

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During the early days of the COVID-19 pandemic, there was a lot of talk about contactless payments.

But there’s still a lot of contactless payment chatter. And rightfully so – this payment technology offers several benefits.

We’ll get to those benefits.

But first, it’s important to get a solid understanding of contactless payment technology.

What are Contactless Payments?

Contactless payments refers to any payment method that allows customers to buy products or services, with the help of radio frequency identification (RFID) technology and near-field communication (NFC) – removing physical contact between the customer’s smartphone or card and the point of sale (POS).

How Do Contactless Payments Work?

Here’s how contactless payments work:

  1. If a merchant has a POS equipped to accept contactless payments, it has a special symbol on the system to identify the presence of the technology.
  2. After payment is requested, the customer taps their card or smartphone near the POS.
  3. The radio frequency identification (RFID) technology and near-field communication (NFC) allows the card or smartphone to electronically communicate with the POS.
  4. The system processes the transaction.
  5. If the transaction is accepted, the customer receives some sort of confirmation (e.g., checkmark).

There are limits on the amount of a contactless payment transaction – depending on the country and bank. A customer may have to sign for a larger transaction. The limits are in place to reduce high-dollar fraud.

Benefits of Contactless Payments

Here are four benefits of contactless payments for small business owners.


Contactless payments are quick and easy, so you may be wondering if poor security is a tradeoff. The short answer: no.

With a contactless payment, data is encrypted and constantly changing – this protects consumers from fraud.

A magnetic-stripe card – which is a less secure way of paying – uses the same number to access and move money every time a card is swiped. 

No Need to Carry Debit/Credit Card

Contactless payments give consumers the option to leave their debit or credit cards at home, and only carry around a smartphone or wearable device to complete purchases.

That’s one less valuable item to worry about losing.


Contactless payments are fast. The time it takes to swipe, enter a personal identification number (PIN), and/or provide a signature can feel like an eternity – especially when the transaction is for a few bucks.

By offering contactless payments, merchants are likely to have fewer frustrated customers.


Contactless payments reduce contact with public surfaces. In a post-COVID world, people are highly aware of health and safety. Avoiding any virus – coronavirus or other types – is a priority for many individuals.

Types of Contactless Payments

Let’s look at a few types of contactless payments.

Debit/Credit Cards

A debit or credit card with NFC technology can be used to execute a contactless payment. The consumer simply taps or waves the card above the payment system.

Apple Pay

Apple Pay… a very popular type of contactless payment.

To get started with Apple Pay, a consumer adds their debit or credit card to the Wallet app on their Apple device.

Apple Pay requires Face ID, Touch ID, or a passcode to make a purchase, protecting a consumer in the event the iPhone, Apple Watch, Mac, or iPad is lost.

To pay for a product or service, the consumer holds the device near the contactless reader until a checkmark and the word “Done” show on the screen.

Google Pay

Google Pay is a mobile wallet available on Android devices.

This mobile payment service shares a lot of similarities with Apple Pay.

Here’s more information on Google Pay.

Start Accepting Contactless Payments

Consumers are starting to expect businesses – small, medium, and large – to accept contactless payments.

So, it’s important to be able to accept contactless payments – particularly if your business handles a lot of small transactions.

If you’re looking for an adaptable payment solution, Gravity Payments can help.

Browse payment systems or learn more about building an integrated payment solution.

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