How Contactless Payments Work in Canada

Contactless payment allows you to make a purchase without physical contact with a machine or person. It became popular in Canada during the COVID-19 pandemic.

A person makes a contactless payment using a smart phone at a kiosk.

New technology continues to change the way Canadians make purchases. Contactless payments accounted for more than half of all payments — 53% — in 2023, according to a report from Payments Canada.

Cards and phones with tap-to-pay technology make up the bulk of contactless transactions. Consumers are also increasingly adding other devices, including smart home devices and smart watches, to their payments lineup.

To know if contactless payment is right for you, it helps to understand the technology behind it, as well as the pros and cons.

How does contactless payment work?

Contactless payment doesn’t require any kind of physical contact between a credit or debit card, or a mobile device, and a merchant’s checkout payment terminal.

You can use contactless payment wherever you see the contactless symbol, which looks like a series of vertical waves, or a WiFi symbol turned on its side.

Illustration showing the contactless payment symbol on a credit card and a point of sale terminal.

Near-field communication, or NFC, is the technology that makes contactless payments possible. It relies on a type of radio frequency identification to communicate information between NFC-enabled devices that are in close proximity, such as your credit card or smartphone and a payment terminal. To process a payment, you just need to hold your card or mobile wallet-equipped device a few centimetres above the terminal.

Contactless payment options in Canada

The two main forms of contactless payment in Canada are cards — credit and debit — and mobile devices.

Credit and debit card contactless payments

To find out if your debit or credit card can be used for contactless payments, look for the contactless symbol, usually a series of waves on the back of your card. If the symbol is displayed, you don’t need to do anything special to activate the contactless technology. When it’s time to pay, just tap it or hold it near a contactless-payment-enabled terminal.

Mobile payment app contactless payments

To make contactless payments with a smart device, you will need to enable a mobile payment or digital wallet app, like Google Pay or Apple Pay. If you have an Android phone, you’ll need to download Google Pay, but Apple Pay comes pre-loaded on most iPhones.

Once you’ve added at least one credit or debit card to the app, you can then use your phone to make contactless payments. Depending on the digital wallet app you’re using, you’ll just need to open it, select the specific card you want to use, and hold your phone above the contactless terminal. The payment will go through just as it would if you had swiped or inserted the card.

Are contactless payments secure?

Contactless payments are considered quite safe. Each transaction is processed using a unique encrypted code, and a new code is generated every time you use your card or mobile device.

Some experts even believe that contactless payments are more secure than traditional payments where you swipe your debit or credit card because magnetic strips are old technology, and susceptible to cloning or data breaches.

Another security feature intended to limit your losses in the event of a security breach is the dollar-amount limit imposed on contactless payments. In general, you can use contactless payments for purchases up to a maximum of $250 for Visa, American Express and Mastercard.

For Interac debit card payments, the max is typically $250. There’s also a cumulative spending limit for debit card purchases. When you exceed the limit, which is set by your financial institution, you must enter your PIN. Some merchants may set lower limits.

Note also that most credit and debit card zero-liability policies also protect you against credit card fraud.

Pros and cons of contactless payment

Pros

Fast and convenient.
Digital wallets save you from carrying around a wallet filled with different cards.
Helps keep your money and personal information secure.
No need to memorize a PIN to use a debit or credit card.

Cons

You may not be able to use contactless payment for larger purchases.
Not all merchants accept contactless payment.

As the ways we make purchases change, the Bank of Canada and Payments Canada continue to explore the potential of new payment systems, implementation of a central bank digital currency (CBDC) and policy updates for a thriving economic future of the country.

About the Authors

Kurt Woock

Kurt Woock started writing for NerdWallet in 2021 and has covered mortgages, cryptocurrency, electric vehicles and small business software. Prior to joining NerdWallet, Kurt worked for the Colorado Public Employees'…

Sandra MacGregor

Sandra MacGregor is a freelance writer who has been covering personal finance, investing and credit cards for over a decade. Her work has appeared in a variety of publications like…