American ExpressAmerican ExpressAmerican ExpressAmerican ExpressAmerican Express
United StatesChange Country

Contactless Payment Methods Take Off Worldwide

By Mike Faden

Contactless payments, designed to make in-person payments easier and faster, have taken off as a payment method in many countries, including the U.K. and Australia – though not, to date, in the U.S. Contactless payments are often known as "tap to pay" or "tap and go," because they allow users to make payments by simply tapping a card or mobile device on a payment terminal, instead of inserting or swiping the card and then typing a PIN or signing.

"Contactless payments are becoming the new normal," according to the 2017 World Payments Report, from Capgemini and BNP Paribas.1 Key reasons: many retailers' point-of-sale terminals, as well as a growing number of transit systems and other organizations, now accept contactless payment methods; hundreds of millions of contactless cards have been issued to businesses and consumers; and smartphone mobile wallets are growing in popularity.


Even in the U.S., where adoption has lagged other countries, contactless payments are forecast to rise rapidly, with shipments of contactless cards reaching nearly 230 million by 2021 – an almost 10-fold increase over 2016.2


Contactless Payment Methods Explained


Contactless payment cards and other mobile devices include a microchip and antenna that communicate wirelessly with nearby payment terminals, using near field communication (NFC) technology. A key advantage of contactless payment methods is that users can pay without having to use a PIN or signature for payments below a certain amount, known as a floor limit.3 Contactless payments are typically processed through the same payment networks used for other card transactions.4


U.S. Adoption of Contactless Payment Methods


Contactless payments have had a much more troubled history in the U.S. than in many other countries. Financial institutions first introduced contactless cards at least a decade ago, but those cards were not widely used because few stores accepted the technology at that time.5,6


However, the situation has changed. Many U.S. retail outlets now have terminals that accept contactless payments. Those terminals were installed in response to a payment-industry transition to EMV chip technology in cards, which is designed to increase payment security. Helping to propel retailers to make the technology transition was a 2015 shift in fraud liability; merchants that didn't accept EMV transactions could be held liable for the cost of counterfeit or stolen card fraud.7,8


Many of the new terminals include NFC technology that enables them to support contactless as well as contact-based transactions. This allows users to make payments via devices that include NFC technology, including smartphones and other devices as well as contactless cards.


Further fueling adoption of the technology, some banks have installed contactless ATMs.9 Major transit systems in New York and other cities are also moving to accept industry-standard contactless card or smartphone payments.10


Experts say that card issuers are now beginning to move to dual-interface cards that support both contact-based and contactless payment methods. Still, some researchers recently scaled back their growth forecasts from earlier estimates, citing slower-than-expected adoption by financial institutions.11 Some experts attribute the slow transition to contactless payment methods to several factors, including banks' previous unsuccessful experiments and the large number of different U.S. banks, which makes it harder to drive a wholesale shift to a new standard.12


Contactless Payments in the U.K. and Europe


Adoption of contactless payment methods has advanced much faster in Europe than in the U.S. According to the Smart Payment Association, an industry trade group, 53 percent of all cards shipped in Europe in 2015 were contactless.13 The U.K. is considered a leader in adopting contactless payments14; contactless payments accounted for 35 percent of total purchases in August 2017, up from 21 percent the previous year, according to the financial-services industry group UK Finance.15 In fact, the rapid adoption of contactless payments led the group to predict that debit cards will overtake cash as the most frequently used payment method in the U.K. three years earlier than previously expected, achieving that tipping point by late 2018.


UK Finance expects growth in contactless payments adoption to continue due to several factors, including the increasing number of cards in circulation. The group also noted the use of smartphone mobile wallets, which further contribute to growth in contactless payment methods.16


Contactless payments also account for a large percentage of in-store transactions in several other European countries, including France, the Czech Republic, Poland and Spain. By 2020, all point of sale terminals across Europe must support contactless technology, according to the Smart Payment Association.17


Australia's Adoption of Contactless Payments


In Australia, cards have already overtaken cash as the most frequently used payment method, according to the Reserve Bank of Australia's 2016 Consumer Payments Survey.18 Furthermore, the rapid adoption of contactless cards has facilitated the growing use of cards for lower-value transactions, the Bank said. Contactless payments up to AU$100 can be made without entering a PIN.19,20 Around one-third of all point-of-sale transactions were conducted using contactless cards in 2016 – 3.5 times the share reported by participants in the Banks' previous survey in 2013. Mobile payments accounted for only around 1 per cent of point-of-sale transactions.21


Other countries in the Asia-Pacific region have also rapidly adopted contactless card payment methods. They include China, where 90 percent of cards are contactless, according to the Smart Payment Association, as well as Taiwan and Singapore.22


Contactless Payment Security


Some reports have noted security concerns about contactless payments, raising the question of whether it's possible to use the wireless connection to access and copy information held on the card.23 However, Canadian Bankers Association lists a series of security measures designed to safeguard the cards and contactless payments. The communications work only within short range, making it harder to access the information from a distance. Contactless cards also use secure EMV standards and cryptography, and only relatively small transactions are permitted without a PIN.24 The New York Times also noted that in the U.K., where contactless payments are already widely used, fraud is low.25



Analysts and the financial-services industry expect adoption of contactless payment methods to continue growing worldwide, and to finally take off in the U.S. Though many of those payments will be conducted via cards, industry groups also expect increasing use of mobile wallets. In addition, as the Smart Payment Association notes, a growing range of new devices can be used to make contactless payments, including wearable technology such as watches and rings.26

Mike Faden - The Author

The Author

Mike Faden

Mike Faden has covered business and technology issues for more than 30 years as a writer, consultant and analyst for media brands, market-research firms, startups and established corporations. Mike also is a principal at Content Marketing Partners.


1. World Payments Report 2017, Capgemini and BNP Paribas;
2. “Infographic: Contactless Cards Set to Hit US,”;
3. “Contactless payment,” Wikipedia;
4. ""Tap to pay" card security - An FAQ,” Canadian Bankers Association;
5. “Lessons From Europe on Using Contactless Cards,” New York Times;
6. “Why US banks are missing the contactless wave,” tearsheet;
7. “7 Merchant Tips to Understanding EMV Fraud Liability Shift,”;
8. “Theory Of Payments Evolution: EMV Will Get Better With Age,”;
9. “Wells Fargo Rolls Out Contactless Withdrawals At Thousands Of ATMs,”;
10. “New York to Replace MetroCard With Modern Way to Pay Transit Fares,” New York Times;
11. “Infographic: Contactless Cards Set to Hit US,”;
12. “Why US banks are missing the contactless wave,” tearsheet;
13. An Overview of Contactless Payment Benefits and Worldwide Deployments, Smart Payment Association;
14. Ibid.
15. Card Expenditure Statistics August 2017, UK Finance;
16. “2017 UK Payment Markets Summary,” Payments UK;
17. An Overview of Contactless Payment Benefits and Worldwide Deployments, Smart Payment Association;
18. How Australians Pay: New Survey Evidence, Reserve Bank of Australia;
19. “Credit Card PIN Number Changes In Australia: Everything You Need To Know,” Lifehacker;
20. “Contactless payment,” Wikipedia;
21. How Australians Pay: New Survey Evidence, Reserve Bank of Australia;
22. An Overview of Contactless Payment Benefits and Worldwide Deployments, Smart Payment Association;
23. “Lessons From Europe on Using Contactless Cards,” New York Times;
24. “"Tap to pay" card security - An FAQ,” Canadian Bankers Association;
25. “Lessons From Europe on Using Contactless Cards,” New York Times;
26. Wearable tech: a growing payment opportunity, Smart Payment Association;

Related Articles

Existing FX International Payments customers log in here