The ultimate guide to contactless payments

Contactless payments have surged in usage to become the fastest-growing payment method in the UK, making transactions quick, simple and compliant with COVID guidelines. They now account for 27% of all UK payments – an increase from just 7% four years previously. In this article, we take a look at when contactless payments started, how they work and how they can be utilised for donations and fundraising.

What are contactless payments?

A contactless payment (also known as a tap-and-go payment) is a payment that is facilitated by radio frequency identification (RFID) and near-field communication (NFC) technology. Essentially, the payment terminal creates a small field in the air around itself that can read the information on your card, triggering the payment without you having to make contact by putting the card into the machine or typing in your PIN.

Are contactless payments secure?

This type of payment is considered to be as secure as the more traditional chip and PIN method. There are several safety measures in place to make sure your card isn’t compromised or skimmed for information:

NFC size

This is a physical limitation that makes the field around the payment device just a few centimetres wide, so it would be very difficult for a fraudster to get that close to your card in most cases.

Encryption

Cards with chips are very difficult to clone, which is why they have replaced magnetic strip cards. When the chip comes into the range of the payment device, the acquiring bank and chip each generate a single-use code that is unique to that transaction. When the codes match, the transaction is accepted. Even if someone could intercept this code, it would be useless as it can’t be used on additional transactions.

Transaction value

When using contactless payments there is a set limit on how much can be spent in a single transaction. This was originally in place to safeguard consumers as they get to grips with the technology, but it also prevents fraudsters from making large purchases. Any attempts to make a contactless payment above a set value will require a PIN.

When did contactless payments start in the UK?

The first contactless card payments started in the UK in 2007. Back then, the limit was set to £10. It was introduced as a fast and simple way to pay for small items and an alternative to carrying around pocket change. In 2010, this was raised to £15 and then to £20 in 2012. The pandemic caused a surge in demand for contactless payment to support health initiatives, increasing from around 160 million transactions in January of 2016 to over 169,162 million by October 2021.

What is the limit for contactless payments?

As of October 2021, the contactless payment limit for the UK has increased from £45 to £100 with no daily or monthly limit. These limits are set by HM Treasury and the Financial Conduct Authority. There were two main reasons for increasing this limit: general cost of living increases and increased consumer demand for contactless as a safe and viable alternative to cash payments.

How long do contactless payments take to process?

The time it takes to process these payments depends on the companies processing them and the configuration of the payment terminal or device. In general, they take 2-4 days and sometimes much less. However, as a consumer making the transaction, they are essentially instant.

Why are contactless payments so popular?

For many years now, UK consumers have been part of the global trend of moving away from cash and on to digital payments. Contactless is especially popular because transactions can be completed in as little as 15 seconds with no need to handle cash and calculate change. This is also beneficial to merchants because staff can be moved off tills and redeployed elsewhere. Contactless payments are safer than cash for customers and businesses, and the additional security offered by contactless payment systems makes them much more secure than magnetic strip cards as customers are protected from unauthorised large purchases. Finally, contactless payments can also help businesses improve customer service by making payments quick and efficient, as well as helping fundraising teams by making it easy for people to make tap-and-go donations.

Contactless payment solutions for easy giving

Whether you are raising money for an organisation, school, religious institution, or charity, Goodbox can help you make it happen. We’ve built a cutting-edge contactless card reader for charities to raise funds safely and securely. These devices are designed with charitable giving in mind, simplifying the donation process by removing the need to handle cash. What’s more, at GoodBox we’ve found that contactless payments actually increase donation values, with our average donation size peaking at £11.90!

These lightweight, portable devices are secure and fully certified. They also work both online and offline with up to four hours of battery power to support door-to-door and unconnected donations. Finally, our devices support all major payment methods and can also be used to take donations over the phone or at in-person events. Find out more by contacting the team or by downloading a pricing brochure.