Contactless Payments: How it works

Almost 3/4 Kiwis are using contactless technology to pay retailers today and that’s on the increase. But what are contactless payments and how do they work?


Contactless payments at a glance

  • Contactless transactions are made by holding a contactless card, tag or mobile device close to an enabled-terminal.
  • The terminal and the card, tag or mobile device ‘talk’ to each other using NFC (near field communication)
  • There are multiple layers of security to protect customers and merchants.
  • All Smartpay terminals are contactless-ready, with future trends always being explored.


What are the options in New Zealand?

Tap-and-Go is already well established in New Zealand with Visa’s PayWave and Mastercard’s PayPass. AMEX Expresspay and Unionpay’s Quickpass are due to arrive soon and on top of that you have ApplePay and Android Pay available on your phone or smartwatch.

Kiwis are the highest users of contactless technology and almost 75% of Kiwis say they find it convenient and fast.[1]


Setting up to accept contactless payments

Choosing to accept contactless payment is easy.  You just need to do two things:

  • Contact your merchant bank and let them know you want to accept contactless payments
  • Check your terminal is capable of taking contactless payments

If you’ve got a Smartpay terminal, you’ve got no issues there – all our terminals can take contactless payments.  If you don’t have a Smartpay terminal, then maybe you want to drop us a line.


What actually happens in a contactless transaction

Contactless transactions typically use NFC (near field communication).  This technology allows a terminal and a contactless card, tag or smartphone to ‘talk’ to each other over a short distance. There’s no need to swipe or insert cards. It works like this:

  • On a Smartpay terminal the NFC reader is placed conveniently at the top of the screen, and if you’ve enabled contactless payments your customer will see the contactless logo and be asked to ‘present’ their card as well as ‘insert or swipe’.

On a Smartpay terminal, the coloured lights on your screen will tell you if the card, tag or smartphone has been successfully read.

Tip! Contactless payment is not an option with Purchase with Cash Out transactions, or in Offline Mode.


Safety first – the security around contactless

There are plenty of measures in place to make sure a customer doesn’t make an unintentional payment, or that a hacker can’t use the signal to hack details of the card.

Contactless payments can be more secure than classic debit or credit cards and are certainly less risky than handling cash for merchants.

Six good reasons customers and retailers should trust contactless:

  • Contactless cards never leave a customer’s hand:
    A lot of card skimming thefts happen when you hand your card over to make a payment.
  • Unique transaction codes:
    Every transaction has its own unique code to prevent double billing. It also means all payments can be tracked.
  • $80 purchase limit:
    As an extra safeguard, customers need to enter their PIN for any purchase over $80.
    With Covid-19 this threshold has been increased and varies by bank.
  • Built-in encryption:
    Contactless cards were specifically designed to transmit data, and have built-in security features that older cards don’t.
  • Contactless, not remote:
    A card or device needs to be within a few centimetres of the terminal to work, so it’s virtually impossible for anyone to ‘intercept’ the details.
  • Limited details:
    Contactless cards only contain the same data that’s written on the card so fraudsters can’t clone the card.

Where next?

Payment technology is developing at a rapid pace and contactless NFC is just one approach being developed and used around the world. Smartpay is always keeping an eye on these trends when developing our own technology to suit.  No matter how it all plays out, the goal for us is to provide “frictionless payment”, where the whole process is easier for you and your customers.


NEXT STEP – Signing up

If you’re ready to go contactless, talk to your bank today.

And if you need a contactless terminal, get in touch with Smartpay on 0800 005 393 to discuss how we can help grow your business.


Should I get contactless payments?

Try our Checklist for contactless

Contactless payments are a good way of keeping your store from becoming too crowded and your customers moving. This improves the customer experience and can boost sales. Click here for more ways improving customer experience can increase your sales.

[1] Mastercard New Zealand Annual Survey 2017


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