How a contactless payment works
The terminal and the chip talk over near-field communication, or NFC. The chip produces a cryptogram for that one payment, and the terminal sends it to the issuer in the authorisation request.
A phone or watch does the same with a token in place of the card number. The owner is usually verified on the device itself, by fingerprint, face or passcode.
When a contactless payment needs a PIN
In the EU, a tap with no PIN is an exemption from strong customer authentication. Article 11 of Delegated Regulation (EU) 2018/389 allows the exemption for a payment of up to EUR 50, until either EUR 150 in total or five consecutive contactless payments have passed since the cardholder last authenticated.
The UK has its own version of the rule. Card schemes also set contactless limits by country, above which the terminal asks for cardholder verification.
Who builds for contactless payments
Issuers decide which counter to apply and when a card must be inserted again. Acquirers and terminal makers certify the contactless software for each scheme.
SoftPOS turns the merchant's own phone into the terminal, so a business can take contactless payments with no card reader.
Contactless, NFC or chip and PIN?
- NFC payment
- NFC is the radio technology. Contactless cards and phone wallets both use it.
- Chip and PIN
- The card is inserted and the chip is read by contact, with a PIN to verify the cardholder.
- SoftPOS
- The merchant's side: software that lets a phone accept contactless payments.
Where a contactless payment shows up in a platform
Modules that do the work
- Card acquiringCard acceptance on the phone, in store and online, through the acquirer you choose.
- Card issuingVirtual and physical cards, wallets and controls, on the issuer processor you choose.
- AuthenticationSign-in, passkeys and second factors for customers and staff, on your identity provider or ours.
Platforms that need it
Guides that go deeper
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.