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

Tap to pay

At first, there was just cash. Then debit/credit 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 has shown just how consequential an innovation like tap to pay is. Consumers increasingly tap or hover their debit/credit cards, cell phones, and even wearable devices like smart watches at checkout terminals to make payments while avoiding touching surfaces. 

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, payment-enabled mobile, or wearable device. Tap to pay uses short-range wireless technology called near field communication (NFC) to make secure payments.

Even as COVID-19 restrictions begin to ease, consumers remain cautious as they resume shopping at local stores. Tap to pay eliminates the need to touch the same payment terminal used by thousands, as well as the need to hand the card to the cashier. 

In a global study, 79 percent of respondents said they prefer making contactless payments, and cited safety and cleanliness as key reasons.

💡 PRO TIP: Tap to Pay on iPhone for Shopify POS is the fastest way to start selling your products at events, farmer’s markets, and wherever your customers are. Download the Shopify POS app to accept contactless payments with your iPhone—no card reader required.

How does tap to pay work?

Tap to pay credit card

NFC is a specialized version of radio-frequency identification (RFID), a technology that allows devices to identify certain things through radio waves. RFID has 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, specifically 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. 

There will be a unique contactless payment symbol on any payment terminal that supports NFC tap to pay: four curved lines portraying a radio signal (as shown below).

NFC symbol

Communication between NFC devices can either be active or passive.

Passive NFC payments only require one device to supply power. For example, an active device like a point-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. When using Apple Pay on your smartphone at an NFC-enabled at an NFC-enabled POS terminal, for example, for example, both devices send and receive information across an electromagnetic field.

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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.

Rebekah Kondrat, Retail Expert and Managing Partner at Rekon Retail

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, 47% of consumers say they will not shop at a store that doesn’t offer contactless payment. 

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 are 63% faster than cash payments and 53% faster than those using a traditional card.

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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 that changes for each transaction. Even if a hacker successfully steals this encryption code, since it was only valid for 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

You’re fifth in line at Starbucks, and the person who just ordered is searching his pockets trying to find a $10 bill. Wouldn’t everyone—including the cashier—prefer that he’d just tapped his 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 that 65% of young millennials and 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 their daily transactions, which often come from tech-savvy college students, utilize tap to pay. These customers expect Range Leather to be in sync with modern payment methods.

Range Leather Wyoming store

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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
  • Wearables

1. Debit/Credit cards

As noted, NFC-enabled debit and credit cards enable you to check out at the store by tapping or hovering your 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 and credit cards

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

  • First, check for the contactless symbol on both your card and the checkout terminal. 
  • Next, when the terminal prompts you to pay, bring your card within one to two inches of the contactless symbol on the terminal. 
  • The at an NFC-enabled POS terminal, for example will beep, flash a green light, or show a checkmark—then you’re good to go! 

2. Mobile payments

Mobile tap to pay differs slightly from contactless card payments in that you can pay through an app rather than using a physical card. 

Unlike contactless cards, mobile payment often charge transaction fees. Nevertheless, this is increasingly customers’ preferred way to pay since they rarely leave the house without their phones. 

When you tap or hover your NFC-enabled phone over a checkout terminal, the terminal will activate your mobile payment. This app houses your 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 to use a mobile app to make a payment:

  • First, confirm that your mobile device supports tap to pay. 
  • Next, enable tap to pay on your mobile device. 
  • Enter your bank and card information.
  • When you’re ready to make a purchase, confirm that the payment terminal supports tap to pay. Once the terminal prompts you to pay, wave or hold your phone one to two inches from the contactless symbol. 
  • The at an NFC-enabled POS terminal, for example will beep, flash a green light, or show a checkmark—then you’re good to go! 

There are many popular mobile payment including Apple Pay (for iPhone), Google Pay, and Samsung Pay

3. Wearables

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 your convenience to pay to the next level – you don’t need to take out your card or your smartphone to make a payment. These come in various shapes and forms – bracelets, rings, fobs, and smartwatches integrated with NFC technology. 

Here’s how to use a wearable to pay:

  • First, confirm that your wearable is NFC-enabled and can support tap to pay.
  • Next, enable tap to pay. 
  • Then, enter your bank and card information.
  • When you’re ready to make a purchase, confirm that the terminal supports tap to pay. 
  • Once the terminal will prompt you to pay, bring your wearable to between one to two inches of the contactless symbol on the terminal. 
  • The at an NFC-enabled POS terminal, for example will beep, flash a green light, or show a checkmark—then you’re good to go!

If you’re keen on trying out a wearable device, go with a smart watch like Apple WatchSamsung Gear S3, or Fitbit.

How to accept tap to pay at your retail store

Retail stores that adopt the latest technology will stand out from the competition. Here’s how stores 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. 

In 2022, pandemic-wary consumers expect contactless payment methods like chip readers. Since a simple tap can do the trick, ease their tension by taking away their need to touch your store’s terminal or hand your cashier their card. 

Chipper from Shopify is the top chip reader for any retailer adopting tap to pay or replacing obsolete hardware. 

2. iPhones tap to pay

Tap to Pay on iPhone is a new 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

Tap to pay is a fast, convenient, and extremely secure payment method that is both tailored to the ascendant Millenial and Gen Z sensibility and accessible to all. 

As the global economy continues to grapple with the many health, safety, and supply chain issues, tap to pay is one small way to give both customers and retailers a bit more peace of mind.

Accept payments anywhere with Tap to Pay on iPhone for Shopify POS

Shopify POS gives you the flexibility to accept any payment type in your store or on the go using just your iPhone or a card reader. Whether you’re a weekend warrior or have a permanent store location, Shopify POS has what you need to take payments and make sales wherever your customers are.

Tap to pay FAQ

How does tap to pay work?

Tap to pay is a technology that allows you to pay for goods or services by tapping your credit card, debit card, or smartphone to a payment terminal. The process works by using near-field communication (NFC) technology, which enables a wireless connection between the payment terminal and your device. When you tap your device to the payment terminal, it sends your payment information securely to the terminal, which then sends it to the payment processor. The processor verifies your payment and authorizes the transaction, then sends a confirmation to both you and the merchant.

Is Tap and pay safe?

Yes, Tap and Pay is generally considered a safe payment method. It uses near field communication (NFC) technology, which is encrypted to help protect your personal and financial information. Additionally, you can use a secure PIN or biometric authentication like fingerprint scanning to make sure only you have access to your account.

How do I tap to pay with my phone?

To pay with your phone, you need to make sure your phone is set up for mobile payment. This usually involves downloading a payment app and linking it to your credit or debit card. Once that's done, you can hold your phone up to a contactless terminal at checkout and follow the on-screen instructions to complete your payment.