Contactless payment systems are credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification (RFID) or near field communication (NFC, e.g. Samsung Pay, Apple Pay, Google Pay, Fitbit Pay, or any bank mobile application that supports contactless) for making secure payments. The embedded chip and antenna enable consumers to wave their card, fob, or handheld device over a reader at the point of sale terminal. Contactless payments are made in close physical proximity, unlike mobile payments which use broad-area cellular or WiFi networks and do not involve close physical proximity.
Some suppliers claim that transactions can be almost twice as fast as a conventional cash, credit, or debit card purchase. Because no signature or PIN verification is typically required, contactless purchases are typically limited to small value sales. Lack of authentication provides a window during which fraudulent purchases can be made while the card owner is unaware of the card’s loss.
In 2012, Mastercard Advisors wrote that consumers are likely to spend more money using their cards due to the ease of small transactions. Mastercard Canada says it has seen “about 25 percent” higher spending by users of its Mastercard Contactless-brand RFID credit cards.
EMV is a common standard used by major credit card and smartphone companies for use in general commerce. Contactless smart cards that function as stored-value cards are becoming popular for use as transit system farecards, such as the Oyster card or RioCard. These can often store non-currency value (such as monthly passes), in additional to fare value purchased with cash or electronic payment.
Mobil was one of the most notable early adopters of a similar technology, and offered their “Speedpass” contactless payment system for participating Mobil gas stations as early as 1997. Although Mobil has since merged with Exxon, the service is still offered at many of ExxonMobil’s stations. Freedompay also had early wins in the contactless space with Bank of America and McDonald’s.
McDonald’s, KFC, Burger King, Boots, Eat, Heron Foods, Pret a Manger, Stagecoach Group, Subway, AMT Coffee, Tesco, Asda and Lidl are among the retailers offering contactless payments to their customers in the UK. In March 2008, Eat became the first restaurant chain to adopt contactless.
Major financial entities now offering contactless payment systems include Mastercard, China UnionPay, Citibank, JPMorgan Chase, American Express, KeyBank, Barclays, Barclaycard, HSBC, Lloyds Banking Group, FreedomPay, The Co-operative Bank, Nationwide Building Society and the Royal Bank of Scotland Group. Visa payWave, American Express Expresspay, and Mastercard Contactless are examples of contactless credit cards which have become widespread in the U.S. and U.K. In 2019 in the United States, major credit unions, BECU (credit) and PenFed (credit and debit), announced they would begin issuing contactless cards.
The first contactless cards in the UK were issued by Barclaycard in 2007. As of December 2014, there are approximately 58 million contactless-enabled cards in use, in the UK, and over 147,000 terminals in use though this is growing in numbers and percentages of adoption.
Telecom operators are starting to get involved in contactless payments via the use of near field communication phones. Belgacom’s Pingping, for example, has a stored value account and via a partnership with Alcatel-Lucent’s Touchatag provides contactless payment functionalities. In January 2010, Barclaycard partnered with mobile phone firm Orange, to launch a contactless credit card in the UK. Orange and Barclaycard also announced in 2009 that they would be launching a mobile phone with contactless technology.
In October 2011, the first mobile phones with Mastercard PayPass and/or Visa payWave certification appeared. A PayPass or payWave account can be assigned to the embedded secure element and/or SIM card within the phones. Google Pay is an application for devices running Google’s Android OS, which allows users to make purchases using NFC, which initially required a physical secure element but this was replaced by host card emulation which was introduced in Android 4.4 (KitKat). Softcard (formerly known as Isis mobile wallet), Cityzi and Quick Tap wallets for example, use a secure SIM card to store encrypted personal information. Contactless payments with enabled mobile phones still occur on a small scale, but every month an increasing number of mobile phones are certified.
In February 2014, Mastercard announced that it would partner with Weve, which is a joint venture between EE, Telefónica UK, and Vodafone UK, to focus on mobile payments. The partnership will promote the development of “contactless mobile payment systems” by creating a universal platform in Europe for it.
In September 2014, Transport for London’s Tube began accepting contactless payment. The number of completed contactless journeys has now exceeded 300m. On Friday 18 December, the busiest single day in 2015, a record 1.24m journeys were completed by over 500k unique contactless cards.
In 2016 Erste Group launched an NFC-only debit card implemented as a sticker in Austria. It can be used at any NFC supporting terminal for transactions of unlimited amount however for transactions over the floor limit of €25 a PIN is required to confirm the transaction.
In 2016, contactless payments start to become even broader with wearable technology devices also offering this payment feature.
In June 2017, it was reported in UK media that purchases made by card now surpassed those made by cash for the first time. This was reported to have been driven by the rise in contactless payments, which now account for approximately one-third of all card transactions in the UK. The number of payments by this method had increased significantly since the spending limit was raised from £20 to £30. 
In 2018, the Westpac Banking Corporation in Australia revealed contactless payment statistics from 2017 and claimed in the report that contactless payments approached saturation point by being used in over 90% of purchases. The Australian St.George Bank reported 94.6% usage for the same period.
Security researchers have found that the cardholder’s name, credit card number, and expiration date may be transmitted by contactless payment cards without encryption. They were able to use information leaked from a contactless credit card to make a purchase online, without opening the envelope in which the card was sent.
Depending on the economic space, there may be a payment limit on single transactions without the need to input the PIN, and some contactless cards can only be used a certain number of times before customers are asked for their PIN. Contactless debit and credit transactions use the same chip and PIN network as older cards and are protected by the same fraud guarantees. Where PIN is supported, the contactless part of the card may remain non-functional until a standard chip and PIN transaction has been executed. This provides some verification that the card was delivered to the actual cardholder.
Under fraud guarantee standards, U.S. banks are liable for any fraudulent transactions charged to the contactless cards.
Because no signature or PIN verification is typically required, contactless purchases are typically limited to a set maximum amount per transaction, known as a floor limit. Limits may vary between banks.
|Australia||No limit||For transactions over A$100 a PIN or biometric authentication is required.|
|Austria||No limit||For transactions exceeding €25 a PIN is required. Additionally for cards produced before 2017 only five transactions can be made without a PIN. Cards issued after December 2016 need a PIN code for transactions over €25 or a contactless total of €125.|
|Bangladesh||BDT3000.00||For transactions over BDT3000.00 a PIN is required.|
|Belgium||No limit||For transactions over €25 a PIN is required. When several contactless payments in a row reach the amount of €50, the PIN is required.|
|Brazil||No limit||For transactions over R$50,00 a PIN is required.|
|Bulgaria||No limit||For transactions over 50 BGN (~€25) a PIN is required. 25 BGN (~€12) until April 12th 2019.|
|Canada||No limit||Limits are completely at the discretion of the merchant’s acquiring bank and the consumer’s bank. There is no law limiting the amounts. However in practice, financial institutions limit contactless payments to $CA100. Some merchants may accept higher amounts subject to signature verification.|
|China||CN¥1000||UnionPay QuickPass. PIN required unless disabled with bank.|
|Colombia||No limit||For transactions over COP 50.000 PIN is required.|
|Croatia||No limit||For transactions over 100HRK PIN or signature are needed.|
|Czech Republic||No limit||For transactions over 500 CZK PIN is needed. After 3 consecutive contactless transactions, PIN is required.|
|Denmark||No limit||For transactions over 350 DKK PIN is needed. Sometimes PIN is needed anyway to ensure the card is used by its owner.|
|Dominican Republic||No Limit|
|Finland||€50||€25 up until April 12th 2019. After that it will be 50€.|
|France||€30||Can be used up to three times a day.|
|Germany||No limit||For each transaction over €25 or €50 (some Visa cards) a PIN or CDCVM verification is required.|
|Greece||€25||For transactions over €25 a PIN is required|
|Hong Kong||No limit||Initially banks, not government, set it for $500 or under, then (for some banks) under $1000 (HKD), until the limits were removed.|
|Hungary||No limit||For transactions over 5000 HUF PIN is needed. For every 10 consecutive contactless transactions or if you reach 10.000 HUF PIN is needed. No limit for Apple Pay contactless purchases.|
|Iceland||ISK 5.000||Íslandsbanki has a lower limit of ISK 4.200. For each transaction over the limit, Chip and PIN are required. Also, a cumulative limit of ISK 10.000 between Chip and PIN uses.|
|India||Rs. 2000||Above Rs. 2000 Contact chip transaction needs to be done.|
|Italy||€25||For transactions over €25 PIN is needed|
|Japan||JP¥20000||JCB QUICPay and QUICPay＋|
|Macedonia, Republic of||750 MKD|
|Malaysia||RM250||Cumulative limits (total amount and/or consecutive transactions) differ between card issuers.
By default, for each transaction above RM250 PIN is required. But the limit is customizable. 
|Netherlands||No limit||For card payments of more than €25 at once or €50 in a row a PIN is required. Some older cards only allow five transactions in a row without a PIN. Most retailers have terminals that support CDCVM as verification (i.e. Apple Pay). While some banks already offer Android NFC/Tap&Pay, both service’s are supported. Also note that broad acceptance of credit cards isn’t commonplace yet, so that’s up to the individual merchant.|
|New Zealand||No limit||For each transaction over NZ$80 a PIN is required.|
|Norway||No limit||For each transactions over 400 NOK a PIN is required. Sometimes PIN is needed anyway to ensure the card is used by its owner.|
|Poland||No limit||For transactions over or equal to 50 PLN PIN is required. National Bank of Poland has authorised Visa and Mastercard to increase this amount to 100 PLN.|
|Romania||No limit||For transactions over or equal to 100 lei PIN is required.|
|Russia||No limit||For transactions over ₽1000 PIN or signature is required.|
|Saudi Arabia||100 SR per transaction (3 max)||After 3 consecutive contactless transactions, PIN is required.|
|Serbia||No limit||For more than 2000RSD PIN verification is mandatory|
|Singapore||S$ 100||The current transaction limit for contactless payments in Singapore is S$100, although some banks offer higher.|
|Slovakia||No limit||For transactions over €20 PIN is needed. After 3 consecutive contactless transactions, PIN is required.|
|Slovenia||No limit||For transactions over €15 PIN is needed.|
|South Africa||500 ZAR||Increased to R500 in May 2017 (except for ABSA Bank which remained at R200)|
|Spain||No limit||For more than €20 PIN verification is mandatory|
|Sri Lanka||No Limit||For more than LKR 5000 PIN/signature verification is required|
|Sweden||200 SEK||For each transaction over 200 SEK a PIN is required.|
|Switzerland||40 CHF||For transactions over 40 CHF a PIN is required.|
|Taiwan||No limit||Signatures may be required for large purchases.|
|Turkey||No limit||For transactions over 90 TRY a PIN is required.|
|Ukraine||No limit||For transactions over 100 UAH a PIN is required|
|United Kingdom||£30||£20 until 1 September 2015; still £20 limit on some cards. There is no transaction limit when using contactless with two-factor authentication (e.g. Apple Pay), although some merchants who have not updated their card terminals’ software correctly apply a £30 limit as if there was no authentication. This is gradually improving.|
|United States of America||No limit||A signature may be required for large purchases.|
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Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder TBIL.co STATX Fund.