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Contactless Payment Solutions and How They Work?

4 November 2020

Payments that are made using contactless cards or smart devices by touching the reader with the contactless card or device, or to bring in to close proximity to it, without the need for signature or pins to authorise payments. For the reason that no other authentication is required banks limit the maximum payment amount that can be made this with to £45 per transaction.



Contactless payment system is a method for consumers to make secure payments by use of;


  • credit and debit cards
  • Smart cards
  • Key fobs
  • Smart devices e.g mobile phones
  • Biometrics

How do contactless payments work?

Contactless payment solutions use one of two related technologies; RFID and NFC.

RFID in simple terms is technology uses radio frequency waves to transmit data between a microchip (tag) and the reader. There are 2 types of RFID chips, passive and active depending on how they are powered. RFID has many applications in different industries and not restricted to Conactless payments. RFID is an industry that is worth $12.08 globally and expected to reach $16.23 billion by 2029.


The origin of the technology that made contactless payments possible dates back to 1898, when Nikola Tesla created a system using radio signals to control a device without the need to directly touch it. Not until 1983 was a patent for RFID (radio frequency identification) technology issued to Charles Watson, for one of the two technologies used to make contactless payments. The second technology being NFC (near field communication) which was only accepted as a standard in 2003.


NFC technology enables the contactless transfer of data over short distances, unlike RFID can transmit over much longer distances. It’s also the technology that enables the use of mobile phone devices as contactless payment solutions. Two NFC-ready devices brought into close proximity (Max. 4cm apart) can transmit, once they are linked they can exchange data. The fact that they have to be as such close proximity means that it’s more secure as less likely that the transmission can be intercepted.  It was only in 2011 that Barclays and Orange teamed up to allow for Europes first mobile phone payments. It worked by allowing users to top up their phone with £100 and make £15 transactions at a time using their mobile phone. With the technology developing whilst becoming cheaper makes the rise of the Cashless society more likely scenario sooner rather than later.


What’s the Future for Contactless?

In 2020 the accelerate growth and acceptance of contactless payment caused by the Pandemic has meant a significant number of retail transactions are contactless as people aim to reduce the risk of contracting the virus. Even before the pandemic, contactless card payments accounted for 50% of all debit card transactions for the first time last year. However, contactless payments are now advancing beyond the point of the use of cards and to biometric verification. A number of retailers in the UK are trialing the use of fingerprint biometric terminals. 


The significant benefits of biometric contactless payments, from increased security, compared to other forms of payment, to the increased ease and speed of carrying out transactions, it’s likely that consumer desire for convenience will drive trends up. For retailers, the benefit is even higher as research has shown that consumers using contactless payments will actually spend more than when using cash, so it’s easy to see why such payment methods will only get further promoted.


Arana Security offer a biometric payment terminal using IDEMIA’s MorphoWave Compact. For more information, please click here.


So the question is how soon will the UK catch up to Sweeden’s advancement towards becoming an almost totally cashless society?