A guide to contactless phone payments

Gone are the days of carrying cash or even swiping a card to make a purchase. In today’s digital-first world, contactless phone payments have revolutionized how people shop.

Shoppers are using their phones to make payments more often than ever. Contactless purchases are expected to increase annually by an average of 23% worldwide, exceeding more than 522 billion purchases by 2026.¹

But what exactly is a contactless phone payment? This guide covers what to know about how to pay with your phone, from the way it works to why an increasing number of shoppers are choosing this method.

How contactless payments work

Many know the feeling of standing at a checkout line, fumbling through a wallet to find the right credit card or counting up the cash needed for a purchase.

But with contactless phone payments, it’s possible to complete transactions simply using a mobile phone as a payment tool.

With various contactless payment methods available, here’s a breakdown of how people can pay with their phones:

• Digital wallets.  Digital wallets allow storage of payment information securely on a phone. When someone is ready to pay, they simply hold their phone near the payment terminal with their digital wallet open, and it communicates wirelessly with the terminal to transfer the payment information.
• QR code payments. This is where a customer can scan a code displayed by the merchant using their phone's camera. Once scanned, the customer just needs to confirm the payment on their phone and complete the transaction.
• Tap to pay. Tap to pay is a method similar to using a digital wallet. Instead of holding a phone up to the terminal, simply tap the phone on the terminal. It's fast, convenient, and secure.

Contactless phone payments utilize near-field communication (NFC) technology, which allows two devices close to each other to transmit data wirelessly.

When can contactless phone payments come in handy?

Whether someone is in a hurry or simply looking for an easy way to pay, using a phone to pay can provide a fast, secure, and convenient way to complete transactions on the go.

Here’s a quick overview of some potential benefits of using contactless phone payments:

• They’re efficient. With contactless phone payments, there’s no need to carry cash or cards. Instead, all that’s needed is a phone, which most people are often always carrying with them.
• Transactions are fast. Contactless payments are generally quick, making it an easy way to pay for purchases in just a few seconds.
• Take advantage of real-time tracking. Many contactless payment methods allow viewing of transaction history and help keep track of spending in real time.
• They’re widely available. Contactless payment methods are widely accepted at major retailers, restaurants, and other businesses.

Is using a phone for contactless payments safe?

Another potential advantage of contactless phone payments is that they can be secure. Because payment information is stored on the phone and transmitted wirelessly to the payment terminal via NFC technology, there’s less worry about someone stealing a physical card or cash.

Plus, many contactless payment methods use advanced encryption and authentication to keep data safe.

Learn how to add payment methods to a PayPal digital wallet.