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A guide to contactless payment cards

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Last editedApr 20233 min read

Getting paid – and making payments – isn’t a zero-sum game. There are a broad range of payment methods to explore, from cash and Bacs to credit cards and Direct Debit. The rise of electronic payments has also had a significant effect on people’s spending habits. While Android/Apple Pay allows customers to pay from their mobile device, contactless payments give them the opportunity to make a payment from their credit card without it touching the card reader. Find out a little more about how to use contactless cards with our simple guide.

What are contactless card payments?

As the name suggests, contactless payments are a type of card payment that you can make without the card coming into contact with the card reader. Contactless payments don’t just cover debit cards, credit cards, and prepaid cards, but also mobile phones and wearables. Rather than entering your PIN, all you’ll need to do is place your card on or near the card reader, and the payment will be complete.

How do contactless cards work?

The technology behind contactless payment cards is relatively straightforward. Essentially, they make use of close proximity radio-frequency identification (RFID). RFID reads the radio signals that are emitted from your contactless device, thereby enabling a payment to be made. From a consumer standpoint, all you need to do is tap or hover the card near the reader and wait for it to recognise the signal. Once it does, you’ll see an approval message on the card reader.

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Is there a contactless card cap?

There is a contactless card cap of £100, which has been in place since October 2021. Before then, it was just £45. If you’re making a purchase in the UK for more than £100, you’ll need to enter your PIN as usual. However, there are some exceptions to this rule. “Higher value contactless payments” can exceed the set limit. These can only be made from devices that support some form of customer authentication, such as Apple Pay.

So, what about daily transaction limits? Contactless cards in the UK don’t usually have a daily limit on the amount of times you can make contactless payments. Of course, you’ll need to have enough money in your account to cover your purchases, but you won’t need to worry about making too many contactless payments.

It’s also worth remembering that there may be a minimum card spend to watch out for. Generally, minimum card spend in the UK is set at around £5.

How do I accept contactless card payments?

Want to know how to use contactless cards as a merchant? You need to have the right payment terminal. Take a look at your card reader, and if you see the contactless symbol, you should be able to accept contactless payment cards. If the contactless symbol isn’t present, get in touch with your POS provider and ask them to send you an up-to-date terminal that can accept these types of payments.

How long do contactless payments take to clear?

For merchants, transaction settlement times are similar to other payment types. The industry average is around T+3 (transaction date plus three days), although the specific timeframe within which contactless payments are settled and cleared will depend on your agreement with the acquirer.

What are the benefits of contactless payment cards?

Contactless payments have numerous benefits that make them a great addition to the payments landscape.

First and foremost, contactless payments have an ease and simplicity that is difficult to beat. This reduces queue time, improves the customer experience, and allows you to serve more customers than you would otherwise be able to. Furthermore, contactless payment cards have relatively low fraud rates, helping you to mitigate risk.

In addition, the reduced cost of cash handling and cash shrinkage (via theft and fraud) lets you take advantage of cost reductions. In short, it’s a payment method that’s been specifically designed to provide quick and convenient payments in environments where speed of transaction plays a major role in customer experience, such as a retail store or supermarket.

Are there any disadvantages to accepting contactless cards in the UK?

There are very few limitations associated with contactless payment cards. While there were initially some worries from consumers about the security of this new technology, contactless cards are becoming increasingly solidified as one of the UK’s top payment options. In fact, UK Finance has predicted that by 2028, 37% of all purchases made in the UK will be contactless.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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