What Is Tap To Pay? How It Works & Ways To Accept It

First, there was cash. Then credit and debit cards revolutionized how we pay for goods and services. 

Today, contactless payment methods have once again changed the global marketplace. 

In a few short years, it’s become second nature for consumers to tap their cards, smartphones, and wearable devices at checkout terminals to make payments.

Let’s take a look at how tap to pay works—and how you can support contactless payments in your store. 

What is tap to pay?

“Tap to pay” is a contactless way for customers to make purchases. Instead of swiping or inserting a card into a payment terminal, buyers tap their cards, smartphones, or compatible wearable devices.

The technology behind tap to pay is called near-field communication, or NFC. It’s a short-range radio frequency that lets a payment terminal and a contactless card or device communicate with each other securely and wirelessly.

History of tap to pay

Tap-to-pay has a deep history. The concept gained popularity in the 2010s with the development of mobile wallets. However, the first contactless payment technology was Mobil’s Speedpass, a keychain device that used RFID technology for quick payments at gas stations in 1997. 

In 2004, Barclay’s in the UK introduced the first contactless credit card using NFC technology. This let customers make payments by simply tapping their card on a reader. 

Moving into 2011, Google Wallet was launched, one of the first mobile payment systems using NFC. It allowed users to store debit and credit card information on their smartphones for easy payments.

Since then, major financial institutions and retailers have begun accepting contactless payments, which led to broader adoption. The COVID-19 pandemic accelerated this adoption, and today, contactless payments are responsible for over 50% of global in-person transactions. 

The future is also bright for tap to pay. Almost $10 trillion in contactless payments are projected to be processed by 2027, according to Juniper Research, with an increase of 221% between 2022 and 2026. 

How tap to pay works

Customers can tap to pay thanks to technology called near-field communication, which is a type of radio-frequency identification, or RFID. RFID readers have been used for decades in settings like supermarkets and airports to identify your groceries and baggage.

NFC operates on a specific RFID frequency, 13.56 MHz, which avoids interference from other wireless devices and ensures communication can only happen over a small distance. This provides a layer of payment security and reduces the chance of accidental taps.

Here’s how it works:

1. Initiation: The transaction is initiated when the NFC-enabled device is brought close to the payment terminal, activating the NFC communication.
2. Transmission: The device transmits a unique encrypted code containing the transaction details to the terminal. This code typically includes information like your card number and expiration date, but is secured with encryption.
3. Merchant processing: The payment terminal sends the encrypted information to the merchant’s bank (also known as the acquiring bank).
4. Bank verification: The acquiring bank forwards the transaction details to the cardholder's bank (the issuing bank) for verification.
5. Authorization: The issuing bank verifies the details, checks for sufficient funds or credit, and performs fraud checks. It then sends back an approval or denial.
6. Completion: Once the terminal receives the approval, it completes the transaction and sends a signal to your card or device to confirm the payment.
7. Receipt and record: The terminal may print a receipt or log the transaction in the merchant's system, completing the payment process.

All NFC-enabled payment terminals feature a universal contactless payment symbol of four curved lines representing a radio signal:

Today, many terminals can accept contactless payments, including point-of-sale systems, vending machines, parking meters—and even smartphones.

The communication between NFC devices and payment terminals can be active or passive:

• Active NFC payments are a two-way information exchange between powered devices, such as a point-of-sale terminal and a smartphone’s mobile wallet.
• Passive NFC payments require only one powered device. The other device, such as a contactless credit card, doesn't need its own power source to receive information.

💡 Shopify POS hardware lets customers tap to pay at the counter, on the sales floor, and on the go.

Tap to pay methods

As technology evolves, more contactless payment methods are emerging. Customers can now tap to pay using: 

1. Contactless debit and credit cards
2. Wearable devices
3. Smartphones

Wearable devices

NFC-enabled wearables come in various shapes and forms—bracelets, rings, fobs, and smartwatches. Together, they form a market that’s expected to be worth $82 billion by 2026. 

After enabling tap to pay and setting up an account on the device’s mobile wallet feature, wearable users can bring their watch or ring within two inches of the contactless symbol on the terminal to pay.

Smartphones

There are several ways to make a mobile payment with a smartphone, including tap to pay. 

After loading credit or debit card information into a phone’s mobile wallet, customers can select a bank account and hold their phone over an NFC-enabled terminal to pay.

With consumers rarely leaving home without their phones, contactless mobile payments are becoming the preferred payment method in certain markets. All major smartphone manufacturers offer a mobile wallet for contactless payment, including Apple Pay, Google Pay, and Samsung Pay.

How to accept tap to pay

1. Choose a tap to pay method
2. Consider payment processing fees
3. Train retail staff on how to accept tap payments 
4. Promote contactless options
5. Consider tap to pay security 

1. Choose a tap to pay method

The first step in accepting tap to pay is choosing the right method. Two common ways to accept tap to pay are POS and mobile card readers.

Contactless card readers

Tap and chip card readers add contactless payment features to point-of-sale terminals—the in-store devices used to process customer purchases and orders.

iPhone tap to pay

Apple Tap to Pay for iPhone is a native Apple feature that lets retailers accept contactless card and mobile payments using their iPhone. When enabled, your phone will display the amount being charged, your merchant name, an icon representing the type of purchase (e.g., groceries), and directions for the customer for where to tap their card or device.

💡 Tap to Pay on iPhone for Shopify is the easiest way to support contactless payments. Accept contactless debit, credit, and mobile payments with just your iPhone—no extra hardware needed.

2. Consider payment processing fees

Payment processing fees are the costs associated with handling and authorizing contactless transactions. High fees can eat away at your profit margins, especially if you’re a high-volume store. 

Providers have different costs and plan structures. Shopify Payments, for example, charges the standard credit and debit rates for contactless payments in the US. 

Fees differ between providers. Consider other fees like:

• Transaction fees
• Chargeback fees
• Statement fees
• Monthly minimums
• Cancellation fees
• Set up fees

3. Train retail staff on how to accept tap payments

Run a training session where staff can practice using contactless payment terminals with dummy transactions. Provide a FAQ sheet to address common customer inquiries about tap to pay.

Training should cover:

• How to operate terminals 
• Troubleshooting common issues, like payment failure 
• Explaining the process to customers unfamiliar with tap to pay

If you thoroughly train your retail staff on accepting tap payments, you'll improve the customer experience and promote contactless payments, ultimately leading to smoother operations.

4. Promote contactless options

Awareness is the first step towards adopting contactless payments. Place signs at eye level near the checkout counters with messages like "Tap to Pay Available Here – Fast and Secure!". Encourage staff to tell customers about your tap to pay options and offer to help them use them if needed. 

5. Consider tap to pay security 

Data security is a top concern for some 86% of Americans. Customers need to feel confident that their payment information is safe and that your business implements good fraud prevention measures. 

Use PCI PTS (Pin Transaction Security) compliant terminals with tamper-resistant hardware. Update your payment systems with the latest security patches and firmware updates from the terminal companies.

Benefits of tap to pay

Here’s why retailers and shoppers benefit from tap to pay.

• Speed. Tap to pay reduces checkout lines by optimizing the payment process. Contactless payments are faster than swiping, inserting a card, or using cash.

• Payment security. Every time a customer taps to pay, their information is converted into a unique encrypted code. Even if a hacker were to access that code, the information is only valid for a single transaction. Active NFC contactless devices may contain additional security layers. Apple Pay for iPhone, for example, requires customers to confirm their identity before making a purchase.

• Popularity. Retailers are now likely to encounter customers who expect to be able to tap to pay. Studies show that 67% of millennials use a digital wallet, with fewer consumers carrying cash or credit cards.

Let your customers tap to pay

Most customers prefer the speed, security, and convenience of tap to pay—so it makes sense to support contactless payments in your store.