Contactless payments

What is a contactless payment?

A contactless payment is paying for something by tapping or waving your contactless device (usually your credit card, debit card or smartphone) over a reader, which then accepts the payment. It allows you to make low-value payments quickly, rather than entering your PIN (personal identification number).

You can set up your credit card or debit card for contactless payments on the card itself (through your bank), with your mobile phone, smart watch or other contactless device. Contactless payments are also often referred to as ‘tap-and-go' by some banks and retailers.

How does contactless work?

Contactless payment cards have a chip inside them that emits radio waves. An antenna is built into the plastic to secure the connection with a contactless reader. This is known as radio frequency identification (RFID) technology.

To pay for something with a contactless credit or debit card, you hold the card near a payment terminal (known as an RFID reader) and it picks up the signal, communicates with the card and processes the payment. If you’re paying with a credit card the charge will then be added to your card balance which will then show on your credit card statement. You’ll need to pay off your balance each month to avoid paying interest charges.

The payment terminal will say if the payment was successful or not. Sometimes it doesn’t work, and you’ll need to use your PIN instead. If you’ve used your credit card and the payment was declined, you may have reached your credit card limit.

How do I use a contactless payment card?

Whether you’re using your debit card or credit card, the contactless payment works in the same way. Here’s how to use a contactless payment card step-by-step:

1. When making a payment in store, look for the contactless symbol on the card machine. If the card machine accepts contactless payments, the four curved lines that are on your card should also appear on contactless-enabled card reader
2. When prompted to pay, tap or hold your card on top of the contactless symbol on the card reader
3. You’ll receive confirmation that your transaction is successful, by either a beep, green light or a check mark on the screen. You may want to ask for a copy of your receipt to check your transaction has gone through and you weren’t overcharged

What is the limit on contactless?

The limit for a contactless transaction increased from £45 to £100 on 15 October 2021. Any card transactions higher than £100 will still need you to enter your PIN. The increased contactless limit aims to make transactions speedier and more convenient, with contactless becoming a more popular payment option at the checkout.

If you pay with your mobile phone, you can pay contactless for amounts up to £100. If you’re spending between £100 and £300, you can touch and pay by entering your PIN into your phone. To pay with your smart watch, you’ll usually need to press the side button to pay with contactless.

Where can I use my contactless card?

Contactless payments have become more common. This was particularly true during the COVID-19 pandemic. It means you should be able to pay using this method in most retailers. This includes most shops, restaurants, bars, cafes, and even automated services like vending machines.

Some places also allow contactless payments to be used on public transport – for example, in London you can use your phone or contactless card to pay for travel on buses, tubes and trams.

Data provided by UK Finance, based on credit and debit card transactions in July 2021, accurate as of October 2021

What are the pros and cons of contactless cards?

There are several pros and cons that come with paying with contactless, including:

Advantages of contactless

• Speed and convenience: Contactless payments mean you won’t have to spend time entering your PIN. Using your phone lets you pay for items without rooting around in your purse or wallet
• Extra security: Contactless payments have extra security measures in place, like limiting the number of transactions you can make before needing to enter your PIN. Some contactless service providers have imposed a limit on the size of transactions you can make (usually up to £100.) If your transaction costs more than that, you’ll usually be asked to pay using chip and PIN
• More hygienic: Paying with contactless is said to be a more hygienic way to pay as you aren’t touching physical cash or the pin pad on the payment terminal. Paying with contactless became particularly popular during the COVID-19 as a way to reduce the spread of the virus

Disadvantages of contactless

There are risks associated with contactless payments, such as:

• Easy access for criminals: If your card is lost or stolen, someone might be quickly and easily able to make contactless payments using your card. This means it’s even more important to report your card as stolen to your provider as soon as you notice it’s missing
• Travelling: Contactless hasn’t been as widely adopted abroad so you may need to enter your PIN or take currency when travelling overseas

Do I have to activate my contactless card?

When you receive your contactless card in the post, you’ll need to make a Chip and PIN payment to activate it as you would with any other bank card before you use contactless for the first time.

There’ll usually be a sticker on the front of your new card, with a telephone number of the activation line. Some banks also allow you to activate your card in a branch using a paying-in terminal or cash machine. Then you’ll just need to make a normal chip and PIN payment for your first payment and from there, your contactless card should automatically work.

If you’re looking to set up contactless on other devices like your phone, you should be given instructions by your provider on how to do this. For Apple phones, for example, you may be asked to use your fingerprint or facial recognition to activate contactless.

Is my contactless card protected if it gets lost or stolen?

The chip on your contactless card can protect you against fraudulent activity. The chip uses a sophisticated system of unique codes and electronic signatures every time a payment is made, which reduces the likelihood that your card details can be cloned or intercepted.

Your bank will contact you if they spot any suspicious activity on your account. You’ll also be asked from time-to-time to input your PIN after making a series of contactless payments, to improve your account’s security.

Concerned that your contactless card has been lost in the post? If your card hasn’t arrived within 10 days of ordering it, contact your bank. That way, you can check if it’s been stolen or lost, and discuss alternative options like cancelling your card and getting it sent to your nearest branch.

Looking for more information on credit card safety? Our guide explains how credit card protection works.

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