Tap to Pay: What It Is, How It Works, and Benefits (2023)

At first, there was just cash. Then credit and debit cards revolutionized how we pay for goods and services. Today, digital payment methods like “tap to pay” have once again changed the global marketplace.

The COVID-19 pandemic showed just how consequential an innovation like tap to pay is. Now it’s second nature for consumers to tap or hover their debit/credit cards, mobile phones, and even wearable devices like smart watches at checkout terminals to make payments.

Let’s take a look at how tap to pay became everybody’s favorite payment method.

What is tap to pay?

Tap to pay (also known as tap pay or tap on phone) allows purchasers to pay by tapping or hovering over the payment terminal with a contactless chip-enabled card, NFC-enabled smartphone, or wearable device.

Tap to pay uses short-range wireless technology callednear-field communication (NFC)to make secure payments.

Even with the extreme precautions of COVID-19 behind us, consumers still want fast and contactless ways to pay at local stores. And retailers are adapting.

In fact, the contactless payment terminals market is expected to more than double by 2026, reaching$43.42 billion.

How does tap to pay work?

NFC is a specialized version of radio-frequency identification (RFID), a technology that allows devices to identify certain things through radio waves.RFIDhas been used in shopping malls, grocery stores, and airports for decades.

NFC is a branch of high-frequency RFID. It uses a specific RFID frequency (13.56 MHz), to ensure accuracy, and to enable close-range interactions between two devices.

When a contactless-enabled card, mobile phone, or wearable device is within two inches of an NFC-enabled payment terminal, the two devices pass encrypted information back and forth until payment is complete.

Any payment terminal that supports NFC tap to pay has a unique contactless payment symbol on it: four curved lines portraying a radio signal (as shown below).

Communication between NFC devices can either be active or passive.

Passive NFC payments require only one device to supply power. For example, an active device like apoint-of-sale (POS)terminal constantly emits radio waves while waiting for a passive device like a plastic debit/credit card to enter its field to complete a transaction.

Active NFC payments, on the other hand, need two devices to supply power. For example, when a customer uses Apple Pay on their smartphone and taps or waves it over an NFC-enabledPOS terminal, both devices send and receive information across an electromagnetic field.

Benefits of tap to pay

1. Speed
2. Security
3. Convenience
4. Attracting youth

Tap to pay is a feature that customers expect all retail stores to have… It’s a disappointment if they don’t.

Kondrat is right. Experts suggest tap to pay is the norm, as the contactless payment industry is now projected to reach$19.3 billion by 2026.

In fact, according to aVisa study, 41% of consumers would not shop at a store that didn’t offer contactless payments and anotherstudy from Amexconfirms convenience (73%) and speed (54%) are the top reasons that consumers prefer contactless payment options.

Let’s see how both retailers and shoppers can benefit from tap to pay.

1. Speed

Tap to pay is faster than any other payment method. You don’t have to swipe or insert your card or enter your PIN. And you’ll never clog up the checkout line by hunting for cash and forcing the cashier to count out pennies to make change.

The data shows that contactless payments areup to 10 times fasterthan swiping, inserting, or using cash.

2. Security

Tap to pay is one of the most secure payment methods available, protecting your transaction in three ways:

• Tokenization, which replaces your bank information with a series of randomized characters. Your token is unique to you, so hackers can’t steal or copy sensitive information.
• Encryption, which changes for each transaction. Even if a hacker successfully steals an encryption code, since it was valid for only one transaction, it will be totally useless to them.
• Two-factor verification with a PIN or Face ID. While not universal, Apple Pay, for example, asks users to verify each transaction with Face ID.

3.Convenience

你在星巴克排队第五, and the person who just ordered is searching their pockets trying to find a $10 bill. Wouldn’t everyone—including the cashier—prefer if they just tapped their iPhone on the POS?

Say you’re window shopping and find a cool leather jacket, but you’ve forgotten your wallet at home. No worries—the jacket is yours, since you can tap to pay with your iPhone.

In this scenario, the retailer would lose their customer—or at least the sale—if they didn’t accept tap to pay. As Kondrat says, “From a discovery and conversion standpoint, tap to pay is a pretty critical tool for retailers in today’s day and age.”

4. Attracting youth

More young people are using tap to pay. Studies show that65% of millennialsand 57% of Gen Z used a digital wallet in 2021, compared to just 59% and 50%, respectively, in 2020.

Our younger audience rarely carries cash or credit cards. They prefer to use their mobile phones to pay. And if you’re not set up with tap to pay, you’re straight up losing money.

Range Leather is a direct-to-consumer brand that runs a physical store in Laramie, Wyoming. Around half of its daily transactions, which often come from tech-savvy college students, utilize tap to pay. These customers expect Range Leather to be in sync with modernpayment methods.

Tap to pay methods

Although contactless card payments are the most common, people have started using alternative tap to pay methods, like mobile payment.

As technology evolves, more contactless payment methods will emerge. For now, we have three options:

• Debit/credit cards
• Mobile apps
• 穿戴

1. Debit/credit cards

As noted, NFC-enabled debit and credit cards enable customers to check out at your store by tapping or hovering their card over the payment terminal.

The same four-line radio wave symbol that signifies POS systems that accept tap to pay will appear on the front or back of NFC-enabled debit andcredit cards.

Here’s how a customer would use a contactless card to make a payment:

1. Check for the contactless symbol on both the card and the checkout terminal.
2. When the terminal prompts the customer to pay, they can bring their card within one to two inches of the contactless symbol on the terminal.
3. An NFC-enabledPOS terminal, for example, will beep, flash a green light, or show a checkmark—then the payment is complete!

2. Mobile payments

Mobile tap to paydiffers slightly from contactless card payments in that consumers can pay through an app rather than using a physical card. This is increasingly customers’ preferred way to pay, since they rarely leave the house without their phones.

When customers tap or hover their NFC-enabled phone over a checkout terminal, the terminal will activate the mobile payment. This app houses the customer’s debit/credit card details.

It will then pass on the details as encrypted data to the payment terminal for processing. The devices then exchange encrypted data to complete the transaction.

Here’s how consumers can use a mobile app to make a payment:

1. Confirm that their mobile device supports tap to pay.
2. Enable tap to pay on the mobile device.
3. Enter bank and card information.
4. Once the terminal prompts the customer to pay, they can wave or hold their phone one to two inches from the contactless symbol.
5. The NFC-enabledPOS terminalwill indicate when the payment is complete with a light, checkmark, or sound.

There are many popular mobile payment methods, includingApple Pay(for iPhone),Google Pay, andSamsung Pay.

3.穿戴

You might think folks only use their smartwatches to track their heart rates and sleep cycles, but the global wearables payment market is on track to be worth$80.39 billion by 2028.

Tap to pay wearables can take payment convenience to the next level—consumers don’t need to take out their card or smartphone to make a payment. These come in various shapes and forms—bracelets, rings, fobs, and smartwatches integrated with NFC technology.

Here’s how consumers can use a wearable to pay:

1. Confirm that their wearable is NFC-enabled and can support tap to pay.
2. Enable tap to pay.
3. Enter your bank and card information.
4. Confirm that the terminal supports tap to pay.
5. Once the terminal prompts the customer to pay, they can bring their wearable within one to two inches of the contactless symbol on the terminal.
6. The customer will know the payment is complete when they see a light or checkmark, or hear a beep.

The most popular wearable devices are smartwatches likeApple Watch,Samsung Gear S3, orFitbit.

How to accept tap to pay at your retail store

Adopting the latest technology will help your retail store stand out from the competition. Here’s how you can accept tap to pay payment methods and make more sales.

1. Chip readers

Commonly known as the card reader, a chip reader is basically a checkout terminal that accepts tap, chip, and swipe payments seamlessly in connection with your POS system.

Shopify’s Tap & Chip Card Readeris the top chip reader for any retailer adopting tap to pay or replacing obsolete hardware.

2. iPhone tap to pay

Tap to Pay on iPhoneis a capability that lets you securely accept contactless payments, like physical debit and credit cards or mobile wallets like Apple Pay, directly from any iPhone with the Shopify POS app installed.

With Tap to Pay on iPhone, you can start selling in person without purchasing hardware, paying signup fees, or signing any long-term contracts. This makes it more accessible than ever to take your products on the road and sell at farmers markets or craft fairs and more—with just an iPhone and the Shopify POS app.

Start accepting tap to pay at your store

Now that you know tap to pay is a fast, convenient, and extremely secure payment method that is both tailored to the ascendant millennial and Gen Z sensibility, and accessible to all, it’s time to get started.

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