A wide range of financial products dedicated to payments have developed in recent years, among which is contactless payment. As its name suggests, contactless payment (PSC) is a method that allows quick and contactless payment of a purchase via a bank card or mobile phone. Like any technology, contactless payment has its own operating mode and comes with advantages and limitations. If you are considering using this payment solution and wish to understand its operation, this guide is for you!

What is contactless payment?

Contactless payment is a quick payment solution that allows you to make purchases more rapidly at the checkout without physical contact. You can use it for small purchases from merchants offering this payment mode via an electronic payment terminal (TPE) or a smartphone equipped with NFC. Contactless payment can be done using your bank card or smartphone without entering your PIN.

By bank card 

You only need to bring your card within 4 cm of the merchant's reader. In contactless payment, this action acts as a payment order. It does not require entering a PIN, signing, or presenting an ID.

The payment terminal will automatically connect to your bank account, and the purchase amount will be debited from the card. The contactless technology is integrated into your bank card, which you can activate or deactivate by requesting your bank, either from your client space or through a counselor.

By mobile phone 

When the payment is made via your phone, it is called mobile contactless payment. It operates similarly to a bank card with a few differences. Mobile contactless payment works via dedicated applications (Samsung Pay, Apple Pay, Google Pay, etc.) on which you store your bank card data.

You then bring your smartphone, with the application open, close to the merchant's TPE. The purchase amount is debited, and the receipt is generated by the merchant.

The technology and mechanisms behind contactless payment 

Contactless payment relies on Radio-Frequency Identification (RFID) or Near Field Communication (NFC) technology. NFC is a short-range wireless transmission technology known for its high level of security. NFC payment, such as with PayWish, is an example.

The NFC protocol allows two devices, the merchant's TPE and the customer's bank card or smartphone, to communicate and exchange information. At the time of the transaction, waves transmit the bank card or mobile application data to the TPE.

Contactless payment is then made based on the information transmitted to the merchant's electronic payment terminal. Contactless payments are end-to-end encrypted to ensure the security and protection of the customer's bank data.

In practice, contactless payment transactions occur in three steps:

  • The merchant enters the transaction amount. The customer then places their bank card or smartphone on the reader screen (TPE) displaying the contactless payment symbol (in the shape of radio waves).
  • A light turns on, and a beep sounds to signify that the payment is validated.
  • The transaction receipt is automatically generated by the merchant's TPE. The operation is thus completed, and you can withdraw your card or smartphone.

Simplification of transactions: goodbye to PINs (or almost) 

Generally, contactless payment does not require entering a PIN, especially for mobile or card payments. For example, for small contactless payments up to 50 euros made with a mobile phone, no PIN is needed when tapping the card reader.

However, it's essential to note that if you wish to pay more than 50 euros in contactless mode via your smartphone, you may need to provide a PIN. In such cases, you will enter your PIN on the electronic payment terminal or a password on your phone. The transaction amount will then be debited.

Additionally, for security reasons, you might need to enter a PIN for some contactless payments. Similarly, most banks require you to make your first payment by inserting your bank card and entering your PIN to activate the contactless technology.

What is the impact of contactless payment on the customer experience? 

Payment is a decisive step in the purchasing process. As a merchant, you must ensure it is as smooth as possible to avoid losing sales and creating frustration among your customers. Our Pay On Site terminal payment solution fits this logic and goes beyond payment.

Moreover, contactless payment optimizes the customer journey. It regulates the flow at the point of sale. Contactless payment eliminates these frictions and offers a smooth, quick payment experience, positively impacting the customer experience.

According to a 2023 study by IFOP for the French Banking Federation on the French, their banks, and their expectations, contactless card payment is well known to the French (94%), and they trust it (74%). Mobile contactless payment is also popular, with a 90% popularity rate according to the same study.

The advantages of contactless payment for your customers and you 

For merchants and customers, using contactless payment has many benefits. Contactless payment saves time; transactions are completed in seconds without the customer lingering in the store. NFC payment also solves issues like forgotten PINs and endless authorization requests. The checkout process is streamlined, saving time for both merchants and customers.

Contactless payment reduces cashier errors by avoiding cash handling and change management, thus minimizing error risks. Its simplicity and convenience make contactless payment popular among merchants and customers. In a few clicks, the customer completes their purchase without needing to pull out their wallet.

Contactless payment also maximizes transactions. Allowing customers to pay for small purchases with a bank card reduces the risk of abandoned purchases due to not meeting the minimum card usage requirement. Consequently, the number of contactless transactions increases.

Additionally, customers who favor contactless payment will likely return to your store. For merchants, contactless payment ensures quality customer experience, profitability, and increased revenue. For customers, this payment mode via reader is easy, convenient, and potentially a way to foster customer loyalty. Finally, contactless payment offers the advantage of security.

Despite its numerous benefits, contactless payment faces certain limitations. 

As a merchant, you need to equip yourself with an NFC-enabled reader, which usually involves changing equipment and modifying your maintenance contract. However, the benefits of contactless payment make it worthwhile. Moreover, you can rent your electronic payment terminal to limit costs. The 50-euro payment limit is also a drawback of contactless payment.

Security measures for contactless payment 

Beyond its convenience, contactless payment is popular due to its security guarantees. In France, for example, banks limit the maximum amount of contactless payments to 50 euros to prevent potential issues in case of card loss or theft.

Additional measures exist to secure your payment methods and ensure safe contactless transactions. For instance, some banks allow customizing payment and withdrawal limits for their clients. In case of an incident, users can block their bank card via a dedicated application.

When using mobile contactless payment, security measures are also in place. Mobile contactless payment presents minimal risk in case of smartphone loss or theft. Applications like Samsung Pay, Apple Pay, or Google Pay ensure transaction security through various identification forms unknown to potential thieves: PIN, fingerprint, facial recognition, etc.

Likewise, electronic wallet data is encrypted. However, if your card or smartphone is lost or stolen, inform your bank immediately to block your account and prevent fraudulent use.

How does the contactless payment limit work? 

Introduced in France in 2012, contactless payment has seen significant advances, particularly in terms of limits. It is capped at a certain amount per purchase, per day, per week, or per month, aiming to offer maximum transaction security for merchants and customers. There are per-purchase and cumulative limits.

Per-purchase limit 

Initially, contactless card payments were limited to 20 euros per transaction. In October 2017, this amount was raised to 30 euros for users with contactless cards designed at that time, based on the user’s bank-defined limit.

Since May 2020, the contactless payment limit has been set at 50 euros per transaction for most card users. For purchases over 50 euros, the customer must insert their card into the TPE and enter their PIN.

It’s also important to note that mobile contactless payments are not subject to the 50-euro limit. Here, the only limits are those related to the card itself or the bank account.

Cumulative limit 

For security reasons, each bank sets a cumulative contactless payment limit, usually between 50 and 150 euros. To make a new contactless payment, an in-person purchase with PIN entry is required.

Primarily intended to facilitate bill payments, the request to pay also aims to secure transactions and reduce payment delays.