By Retail Brew Staff
less than 3 min read
Definition:
Maybe you thought they were called “contactless” payments because they spared sales clerks and customers from any physical contact during transactions…which they do! But the term comes from the payment industry, and connotes when a credit card doesn’t need to be swiped or inserted into a point-of-sale (POS) device, and can share data without making contact. While the first iteration of contactless payments was chips embedded in credit cards that allowed them to be waved near a terminal, today the term is more associated with making payments from smartphones, thanks to wallet apps like Google Pay and Apple Pay.
Popularization of contactless payments: While the technology was in place and widely used by the time the Covid-19 pandemic struck, the fact that contactless payment was more conducive to social distancing helped the technology really take hold. As the Federal Reserve Bank of Kansas City noted in 2021, the “pandemic and ensuing demand for more hygienic, touch-free payment alternatives led to a significant increase in contactless payment adoption.” Contactless payments accounted for just 0.6% of US in-store (noncash) payments in 2018 and rose 3.4% in 2020, per the Federal Reserve. In 2026, digital wallets alone accounted for as much as 50% of all POS transactions, according to Coin Law.
Contactless payments in context: In 2023, JPMorgan launched a payment platform that enabled merchants to accept contactless payments even without card readers made by vendors like Square or Clover; instead, they could accept the payment with just an iPhone. Cash App introduced a similar feature that allowed merchants to accept contactless payments with iPhones in 2025.
