What are Contactless Payment Apps – Explained

Contactless Payment Apps, In today’s fast-paced world, people are constantly in search of ways to make their life more convenient and easier. And often, they start with their day-to-day activities, and making online payments is one of them. This is where contactless payment comes into play.

Contactless payment apps are mobile apps that provide users with the ease of making payments for their shopping without requiring any debit/credit cards. Users can make payments through their mobile phones without requiring any physical touch. In this post, we’ll discuss what contactless payment apps are and how they change the world of fintech.

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What Are Contactless Payment Apps?

Contactless payment apps are simple mobile payment apps with one added feature – they do not require the user to enter any receiver’s banking or payment details manually or scan any code. The apps work on Near Field Communication (NFC) technology – by using which – a user can make a payment by just bringing his/her smartphone close to the payment terminal and the payment is made immediately. The app receives the banking details of the receiver from the terminal and processes the payment immediately.

How Do Contactless Payment Apps Work?

How to Do Contactless Payment Apps Work


While most of the payment apps or e-wallet apps in the market require the user to enter a phone number or UPI or banking details of the receiver, the contactless payment app works without all these details. While making a payment through a contactless payment app, the user keeps his smartphone near the payment terminal. The app uses Near Field Communication to fetch the receiver’s payment information which is transferred to the payment app. The app uses the preferred payment methods and transfers the amount to the receiver’s account. This works similarly to some debit or credit cards that allow payment through WiFi.

Different Types of Contactless Payment Apps

Depending upon the way they work and the features they offer, there are two types of contactless payment apps. 

Closed Loop Payment App

The first one is the Closed-loop payment app, developed and managed by individual businesses to accept payments. The banking details of the receiver are pre-programmed in these apps which can be retrieved by the contactless payment app. Starbucks and Apple Pay are good examples of such apps.

Open Loop Payment App

These are the apps that are common to all merchants and can be used for multiple businesses. The business owner gets his banking details entered into these apps which are later used for receiving payments. Google Pay and Samsung Pay are examples of open-loop payment apps.

Benefits of Contactless Payment Apps

The main reason behind the growing popularity of contactless payment apps is the number of benefits they offer, to users as well as merchants. Here are some salient benefits these apps have to offer:

  • Convenience 

Unlike other payment methods like credit/debit cards or e-wallet apps, contactless payment apps process payment quickly and more conveniently.

  • Security 

These apps use end-to-end encryption and tokenization while fetching payment details and transferring money. This provides the users with an added layer of security.

  • Speed 

Contactless payment apps process payments faster than traditional payment methods as users do not require using any physical card or scanning any QR code.

  • Contactless Transactions 

This has become very important during post Covid-19 pandemic, as people avoid touching objects that may help the virus spread. Someone’s credit/debit card or phone can be a virus carrier, and contactless payments avoid this issue.

  • Issues with Contactless Payment Apps

Though contactless payment apps provide their users with innumerable benefits, there are some issues associated with them, mostly related to security. Some of the most common security concerns associated with contactless payment apps are:

  • Lost/stolen Phone 

If a user loses his phone or it’s stolen, the thief can easily use contactless payment apps to make unauthorized transactions. You can avoid this situation by providing an added layer of security like authorizing your payment through a notification, which can easily be connected to your smartwatch.

  • Malware 

Near Field Communication and contactless technology make these apps highly vulnerable to malware which can be installed on your phone through these apps. This malware may give cybercriminals access to your phone which may result in fraud.

  • Fraud 

Though contactless payment apps come with great levels of security, still the chances of fraud are always there if someone else gets access to your phone or the app. Also, the user’s personal and banking information is always at risk.

  • Unauthorized Transactions 

Since these apps are capable of processing payments if the payment terminal comes into proximity, someone may make unauthorized transactions by placing the terminal near your pocket without you being aware of it.

Every mobile application associated with the fintech industry is prone to these threats. However, with little carefulness and adding an extra layer of security like double confirmation may prevent these threats and provide you with the great convenience and ease that these apps have to offer.

Popular Contactless Payment Apps:

  • Apple Pay
  • Google Pay
  • Samsung Pay
  • PayPal
  • Venmo


Contactless payment apps are certainly the future of fintech due to the security, convenience, and ease they provide. These apps are highly beneficial for small businesses because customer convenience plays a very crucial role in the success of these businesses. Their benefits are innumerable, and their utilities are endless. Though these apps also come with some security threats, a careful user may avoid these threats by following some simple security protocols.

The market is full but this doesn’t decrease the opportunities this sector has to offer. If you want to build a mobile payment application that provides an extra bit of ease and convenience, consider building over a traditional one. Get in touch with a fintech app development company to turn your idea into a million-dollar business. Get custom wallet app development services at affordable prices from experienced developers.


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