Contactless payment is the new normal.

While it seems like something straight out of sci-fi, it’s just a piece of what modern fintech technology is capable of.

And contrary to popular belief, contactless payment isn’t a new trend. Rather, this has been something that has been around since the 1990s! We have seen its application in debit/credit cards, inventory management, and much more.

But the most popular use of contactless payment to date lies in digital wallet apps.

Being the driving trend behind modern digital payment solutions, contactless payment systems have become a topic of curiosity for many businesses and enterprises alike, especially in the fintech area.

So, whether you just want to ponder over the topic or considering contactless payment integration in your existing platform, this blog is for you.

What is Contactless Payment?

Let’s start by answering the most basic question, what is contactless payment?

Contactless payment refers to a method of making secure transactions without physical contact between the payment device (such as a card or smartphone) and the payment terminal.

It utilizes a range of different technologies to enable quick and convenient transactions.

Thus, making it a go-to technology to develop eWallet app.

But how does this work? Well, let’s see the magic that goes behind making, contactless payment work in modern payment apps.

Who Invented Contactless Payments?

Contactless payment technology evolved through collaborative efforts and technological advancements, with milestones such as the introduction of RFID technology. Not attributed to a single inventor, its development involved contributions from companies like Philips, IBM, and Mastercard.

How Does Contactless Payment Work?

The curiosity behind the question “How Does Contactless Payment Work?” is clear.

After all, this awe-causing payment technology has been wondering whether it is in terms of convenience or security.

1. Initiation

  • User: The user taps or holds your contactless card/phone near the payment terminal at a store.
  • Phone: The embedded chip (often based on Near Field Communication or NFC) in your card or phone is activated.

2. Secure Communication

  • Phone: The chip generates a unique, short-lived code specific to that transaction. This code is encrypted to ensure security.
  • Payment Terminal: The terminal reads the encrypted code and transmits it securely to the payment network.

3. Authorization

  • Payment Network: The network verifies the code, card validity, and sufficient funds with the card issuer (your bank).
  • Additional Security: Depending on the transaction amount or merchant settings, additional authentication likes a PIN or fingerprint scan might be required.

4. Transaction Completion

  • Network: Upon successful verification, the network sends an approval message back to the terminal.
  • Merchant: The terminal displays a confirmation message for the successful transaction.
  • Phone: You might receive a confirmation notification on your phone (if using a mobile app).

The contactless payment working can be actually a little confusing if you don’t understand the technology behind it that is.

Contactless Payment Technologies

What technology does contactless payment use?

Being just a concept, a contactless payment system can be driven by a few different technologies. Let’s see what these contactless payment types are:

Contactless Payment Technologies

1. Near Field Communication (NFC)

Let’s start with the NFC or near-field communication.

It has been the key technology behind contactless payments. The goal of NFC is to, facilitate secure, short-range wireless communication between devices, typically within a few centimeters.

NFC mobile payment enables the exchange of data between the user’s contactless phone and the payment terminal for secure transactions.

We have seen NFC contactless payment in not only NFC payment apps, but also contactless cards, and some wearables like smartwatches.

2. QR Codes (Quick Response Codes)

QR codes are yet another technology that is often seen incorporated in eWallet applications as well as other payment-driven applications.

For those, who don’t know what it is, a QR code is a Two-dimensional barcodes that store information, typically accessed by scanning with a smartphone camera.

Now, here’s how QR code contactless payment works:

While not strictly “contactless” like the other technologies, some payment methods utilize QR codes for initiating transactions. These often involve scanning a merchant-generated QR code with your phone’s payment app to link and complete the payment.

Regardless, QR code payment in eWallet apps has become a trend especially in Asian countries like India.

With this is the go-to choice and a people’s favorite feature in UPI app development.

3. Tokenization

Let’s talk about tokenization.

So, what is contactless payment tokenization? Well, this is a technology that replaces your actual card number with a unique identifier (token) during transactions.

This contactless payment technology is a big name in the payment app security arena. Thus, makes it a go-to choice for contactless payment solutions including mobile wallets.

All in all, this is among the top contactless payment methods.

4. Secure Element (SE)

Lastly, we have one of the contactless payment technologies, secure element, also known as SE.

So, what is SE?

In layman’s terms, it’s a secure chip within your smartphone or other device that safely stores your payment credentials.

The secure element is commonly found in most modern smartphones and some wearables that support contactless payments

When it comes to contactless payment processing, this technology facilitates secure transactions by performing cryptographic operations like encryption and decryption without exposing your sensitive data.

Thus, an essential consideration for the security of the app.

So, that’s an overview of the technologies behind contactless payment solutions. And now that we are all clear about fintech.

Rise Of Contactless Payment, Statistical Insight

Mobile payment statistics show a steady rise in contactless payments across the world, gathering interest from billions across the world.

Making it one of the biggest trends in the fintech market landscape.

  • Contactless payment market Expansion: The market for contactless payments has experienced substantial growth, escalating from $10.3 billion in 2020 to an anticipated $17.9 billion by 2025, reflecting an impressive Compound Annual Growth Rate (CAGR) of 11.7%.
  • Surge in Mobile Transactions: Transactions facilitated through mobile devices utilizing “tap-and-go” technology have displayed robust growth from 2020 to 2023, although they still lag behind card-based alternatives within the United States.
  • Consumer Preference: A significant 87% of consumers express a preference for utilizing contactless payment methods when making in-store purchases, with mobile applications emerging as a favored option.
  • Euro Area Adoption: As of the latter half of 2022, contactless payment statistics show that 53.8% of all card-based transactions within the euro area were conducted using contactless methods, indicating a substantial and growing demand for this payment modality contactless payment adoption by country.
  • Rise of Mobile Wallets: While card-based solutions maintain dominance, mobile wallet platforms such as Apple Pay are steadily gaining ground, with approximately 55.8 million US consumers utilizing this technology for in-store transactions as of April 2023.

A Brief History of Contactless Payment

To better understand the growth of contactless payment, it’s essential to understand its history. So, let’s look at a brief history of contactless payment.

1990sEarly experimentationRFID technology
1995First contactless payment systemSeoul, South KoreaUpass card (public transit)
1997Early US adopterMobil (Speedpass key fob for gas stations)RFID
2000sExpansion beyond transitContactless cards emerge
2007First commercial contactless card programUK (Barclaycard)EMV chip with near-field communication (NFC)
2008First use in public transportation outside AsiaLondon (Oyster card for the Underground)Contactless EMV chip
2010sMobile wallet revolutionSecure Element (SE) chips in smartphones, NFC
2011Launch of major mobile walletsApple Pay, Google WalletNFC on smartphones
2014Surge in mobile wallet adoptionGlobalNFC, biometrics (fingerprint, facial recognition)
2020sMainstream adoption and diversificationVarious technologies (NFC, wearables, Bluetooth)
PresentFocus on security and convenienceGlobalIntegration with wearables, biometrics

Why You (Businesses) Should Be Excited About Contactless Payment!

Why Businesses Should Be Excited About Contactless Payment!

Businesses from Fortune 500 companies to ambitious startups are always looking to deliver “better, more, and faster” to their end-user.

And that’s where contactless payment for businesses comes in.

Problems contactless payment is solving for businesses:


  • High Cash Handling Costs
  • Slow Checkouts and Inefficiency
  • Fraudulent Transactions
  • Outdated Technology and Customer Disconnect

This tap-and-go payment technology is no less than a miracle, especially for fintech and payment-focused companies and all the industries dependent on them.

It is the new secret to become successful among customers.

So, let’s see, why every business owner should bet their money on mobile contactless payment:

  • Faster + Easier + Secure = Happy (& More) Customers

The goal of every business is to deliver convenience to the end user. And there are only a few better ways to do it other than mobile contactless payment.

Let us explain:

Mobile payment via digital wallet apps has already almost completely replaced traditional wallets and people love it. Now, the next natural step is, contactless payment transactions.

So, enabling your customers to pay via a contactless payment app, saves a lot of time.

It eliminates the need for swiping cards or handling cash, leading to significantly shorter lines and happier customers. In addition to this, it streamlines your checkout process and serves more customers in less time.

This translates to increased customer throughput and improved employee productivity. Amazing, right? Well, that’s not all. Contactless payments also highly promote digital security.

Furthermore, contactless payment is becoming a standard among consumer

Contactless payment is quickly becoming the standard for many consumers, and offering this option shows you’re adapting to modern preferences. This can attract new customers who prefer this convenient and secure payment method.

  • Future Proofing With Competitive Advantage

Whether you have an existing solution or planning to develop a fintech app, competitive advantage is the bread and butter of every business.

Well, what if we told you, that contactless payment technology in your solution doesn’t only face the challenges of today and gain a competitive advantage but also helps prepare for the market of the future and become future proof.

To put it in simpler words, you can stay ahead of the curve, by embracing contactless technology

Businesses are future-proofing your business and demonstrating their commitment to innovation and customer satisfaction.

Plus, contactless payment processing is among eWallet industry trends, in fact, some experts go as far as to say, it’s a mega trend.

Thus, if you are investing in contactless payment implementation today, you’ll reap benefits in future.

  • Safer For YOU

It goes without saying with the amount of digital frauds and literal rising crime rate, handling financial flow has become a big challenge.

From cyber threats to lead to billions of losses globally to businesses getting mugged, every business is looking for better security.

And one of the best ways to do this is via digital and even better, contactless payment terminals don’t involve any physical exchange (obviously). Plus, touch-less payments are also quite secure digitally, using the latest standards and following fintech regulations.

This gives businesses an overall firewall against security risks, creating a much safer environment for the business to thrive in.

So, these are the top reasons for businesses to be excited about contactless payment and it’s various implications

CTA 3_Revolutionize Transactions with Contactless Payment Solutions

Contactless Payment as a Feature vs Dedicated App

Whenever there’s a new technological or social trend, a business has two options.

Either go for eWallet app feature integration or develop a dedicated app.

Contactless payment technology offers a convenient and secure way to pay, but businesses have to choose, which brings in the hard part.

Well, let’s first compare contactless payment as a feature vs a dedicated payment app:

FeatureContactless Payment FeatureDedicated Contactless Payment App
Target AudienceExisting app usersBroad audience, including those without the business’s app
Integration EffortLower, leveraging existing app infrastructureHigher, requires building or adopting a separate app
Development CostPotentially lower, depending on existing app development costsHigher, requires app development and maintenance costs
Learning CurveLower, users familiar with the existing appHigher, users need to learn a new app
Branding & MarketingLeverages existing brand and marketing effortsRequires separate branding and marketing strategy
Data IntegrationPotential for deeper integration with user data and purchase history within the appLimited data integration with the business’s existing systems
FunctionalityMay offer limited features beyond basic paymentsMay offer a wider range of features, including loyalty programs, budgeting tools, etc.
SecurityRelies on the security of the existing appRequires implementing robust security measures for the dedicated app
User AcquisitionEasier to reach existing app usersRequires separate user acquisition strategies

Choosing the Right Approach

The best approach depends on your specific needs and goals. Consider the following factors:

  • Existing app user base: If you have a large, engaged user base, integrating contactless payment as a feature can be a cost-effective and convenient option.
  • Desired functionality: If you need more than basic payment functionalities, like loyalty programs or budgeting tools, a dedicated app might be a better choice.
  • Development resources: Consider the resources available for app development and maintenance.
  • Marketing strategy: Evaluate the resources and strategies needed to promote either approach effectively.

Industries That Benefit From Contactless Payment: Integration Opportunity

Fintech directly branches off from one of the most important elements of modern society, finance.

Therefore, it’s safe to say, that almost every industry has contactless payment integration opportunities at a lower or higher level. However, some are more susceptible and suitable for this, also reaping more benefits.

Industries That Benefit From Contactless Payment

So, let’s look at the industries and thus, businesses that should go for contactless payment implants.

1. Fintech Industry (obviously)

First and foremost, the fintech app development itself.

Fintech is a large industry that branches off into multiple niches with each having billions of users across the world.

This covers everything from:

To more common payment apps like PayPal and so on.

Now, the interesting part is, whether you are talking about a digital wallet application or neo banking app, all of them have payment processing features (more or less).

This functionality can be enchanted via contactless payment.

Thus, making fintech apps the first choice to integrate contactless payment technology, is something that billions of people across the world are already waiting for.

2. Healthcare

While the pandemic is a thing of the past now, it has left a lasting impact on our world also being the catalyst behind healthcare app development.

Today, there are on-demand healthcare apps that let people book appointments online to meditation apps. And most of them involve the exchange of services.

Especially, if you want to create a healthcare app that lets people find and consult doctors or can be used to pay at the hospital, contactless payment technology is a must-have.

It only does it save time and deliver more convenience, but it also maintains much-required hygiene in medical areas.

3. Travel And Hospitality

Well, people love to travel and that’s a fact.

And this is what has inspired travel and tourism-based companies from across the world to invest in hotel booking app development with payment being a big part of it.

Now, coming to the point, hotels, resorts, and hospitality businesses can highly benefit from contactless payments for room bookings, amenities, and dining services.

Guests appreciate the convenience and security of tapping their cards or mobile devices for transactions during their stay.

4. Event Management

Event management app development is a big trend among organizers across the world.

This is because the power of mobile apps and modern technologies makes it that much easier to manage the crowds of thousands.

Here, contactless payment solves a big problem.

Event organizers utilize contactless payment technology for ticket sales, merchandise booths, and concessions at concerts, festivals, conferences, and sporting events.

It offers attendees a hassle-free way to make purchases while enhancing operational efficiency for organizers.

5. Any Other App That Offers Payment Processing

So, these are the top industries that benefit from contactless payment transactions. But that’s not all.

There are various other types of mobile apps, purpose-built, and unique that offer payment processing. This covers everything from brand apps to community platforms.

While they might not fit in any category, they too can highly benefit from contactless payment processing.

CTA 2_Embrace the Contactless Era

Advantages and Disadvantages of Contactless Payment

Every technology, no matter how great or innovative, have pros and cons. Contactless payment technology is no different.

So, here are some contactless payment advantages and disadvantages to give you a deeper perspective:

Benefits Of Contactless Payment For BusinessesCons Of Contactless Payment
Convenience: Quick and easy to use, no need to fumble for cash or enter PINs for small transactions.Security: Potential for unauthorized usage if lost or stolen, especially with increased transaction limits.
Speed: Faster checkout times, reducing queues and improving efficiency for both consumers and merchants.Accidental payments: Possibility of accidental payments due to close proximity to readers.
Hygiene: Reduces contact with potentially germ-ridden surfaces compared to cash or chip-and-PIN transactions.Limited acceptance: Not all merchants may have contactless payment terminals yet.
Security (compared to traditional methods): Uses tokenization and encryption for increased security compared to swiping magnetic strips.Technical limitations: May not work on older devices or require specific software ors hardware.
Budgeting: Can help track spending more easily through digital records and budgeting apps.Potential for overspending: Convenience may lead to impulsive purchases without the physical act of handing over cash.

Example of Contactless Apps

The contactless payment market is huge with a plethora of apps already using contactless payment technology.

So, here are some top eWallet apps and others that use this technology:

Example of Contactless Apps

1. General Purpose Apps

  • Apple Pay: Widely used on iPhones and Apple Watch, offers a convenient way to pay in stores, online, and within apps.
  • Google Pay: Available on Android devices, offers similar functionality to Apple Pay.
  • Samsung Pay: Works on Samsung smartphones and smartwatches, compatible with various payment terminals.

2. Industry-Specific Apps

  • Starbucks App: Allows users to order and pay for coffee and other items in advance, eliminating queueing at stores.
  • Uber Eats App: Integrates contactless payment for ordering and paying for food deliveries.
  • OpenTable App: Allows users to book restaurant reservations and pay contactless for their meals in certain establishments.

3. Peer-to-Peer and Payment Request Apps

  • Venmo: Popular for peer-to-peer payments and increasingly used for small business transactions.
  • Zelle: Offers fast and secure peer-to-peer transactions between participating banks and financial institutions.
  • Cash App: Provides money transfer, contactless payment in stores, and investment features in one app.

4. Region-Specific Apps

  • Alipay: Dominant mobile payment platform in China, offering a wide range of functionalities beyond contactless payment.
  • WeChat Pay: Another popular option in China, integrated within the popular WeChat messaging platform.
  • Paytm: Leading mobile wallet platform across the world, offering contactless payments and other financial services.

Contactless Payment App Future: What To Expect

It goes without saying contactless payment technology is here to stay for the long run. And this begs the question.

What does the future of contactless payment hold?

Well, let’s look at some future contactless payment trends to expect. These are, as mentioned below”

  1. Biometric Authentication: Secure payments with fingerprint, facial, or iris scans.
  2. Wearable Payments: Pay with smartwatches, fitness trackers, or even jewelry.
  3. Offline Payments: Pay even without internet connectivity.
  4. Smart Home Integration: Pay for groceries or electricity seamlessly.
  5. Open vs. Closed Systems: More flexible payment options for users.
  6. Emerging Technologies: Blockchain and tokenization for enhanced security.
  7. Increased Security Measures: Real-time fraud detection and multi-factor authentication.
  8. Expansion to New Industries: Contactless payments in transportation, healthcare, and more.
  9. Regulatory Landscape: Evolving regulations to ensure data privacy and responsible use.
  10. Ethical Considerations: Addressing data collection, privacy, and accessibility concerns.

CTA 1_Unlock the Future of Payments

Achieve Business Harmony With Contactless Payment Enabled Apps

Contactless payment changing the digital payment industry forever.

If you want to be part of this change, we are here to help you. Nimble AppGenie is a market leading eWallet app development company with mastery over top trends and technologies.

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Whether you want to develop a dedicated touch and go app or integrate contactless payment in your existing platform, our team can help you. Hire mobile app developers with us and get assigned a dedicated team within 24 hours.

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Contactless payment has become the new normal, offering a convenient, secure, and hygienic way to pay for goods and services.

This trend is expected to continue, with advancements in technology leading to even more innovative payment methods.

Businesses that embrace contactless payment solutions can benefit from faster transactions, improved customer satisfaction, and a competitive edge in the market.


Contactless payment refers to a method of making secure transactions without physical contact between the payment device (such as a card or smartphone) and the payment terminal. It utilizes technologies like Near Field Communication (NFC) to enable quick and convenient transactions.

Contactless payment works through a series of steps involving initiation, secure communication, authorization, and transaction completion. When a user taps or holds their contactless card or phone near a payment terminal, the embedded chip in the card or phone is activated, generating a unique, encrypted code for the transaction. This code is securely transmitted to the payment network for verification with the card issuer, and upon approval, the transaction is completed.

Key technologies enabling contactless payments include Near Field Communication (NFC), tokenization, Secure Element (SE) chips, and QR codes. NFC facilitates wireless communication between devices, tokenization replaces card numbers with unique identifiers, SE chips securely store payment credentials, and QR codes offer an alternative method for initiating transactions.

Businesses should embrace contactless payments for several reasons:

  • Boost efficiency and speed up transactions
  • Enhance security and reduce costs associated with cash handling
  • Meet customer expectations and attract new customers
  • Improve hygiene by minimizing physical contact
  • Gain valuable insights into customer spending habits through data analytics.

Advantages of contactless payments include convenience, speed, enhanced security, improved hygiene, and better budgeting capabilities. However, potential disadvantages include security concerns if devices are lost or stolen, accidental payments due to close proximity to readers, limited acceptance at some merchants, technical limitations, and the potential for overspending.

Examples of contactless payment apps include general-purpose apps like Apple Pay, Google Pay, and Samsung Pay, industry-specific apps like Starbucks App and Uber Eats App, peer-to-peer payment apps like Venmo and Zelle, and region-specific apps like Alipay and Paytm.

Future developments in contactless payments may include biometric authentication methods, integration with wearable devices, offline payment capabilities, integration with smart home devices and IoT, advancements in security measures, expansion to new industries, evolving regulatory landscape, and considerations regarding data privacy and accessibility.