How Long Do Contactless Payments Take to Process Nationwide?

Though initially slow to catch on in the US, contactless payments now have customers and businesses moving faster than ever. Through near-field communication (NFC), smartphones and credit cards have been transformed into magic, time-saving wands. 

But exactly how long do contactless payments take to process nationwide? The answer depends on whether we’re thinking about the speed a transaction processes at the point of purchase, or when a payment finalizes and is posted to an account. 

In this article, we will cover both instances of contactless payment processing:

• The transaction itself 
• The posted transaction

If you are also asking, “what is contactless ordering,” we’ve written about this topic in another blog post.

How Fast are Contactless Transactions?

Customers and business owners alike enjoy transactions that don’t waste any time. 

One of the major benefits of contactless transactions is their speed at restaurants, coffee shops, and other retail businesses.

• From the moment the barista tells you the total to the second after you say, “Thanks, have a great day!” The entire transaction, on average, takes 10 to 15 seconds when using contactless payment. That’s half or less the time that it takes to use a chip-enabled card. 
• A transaction can be approved by an electronics payment company in even less time.  Visa claims to process transactions in a matter of seconds. And Mastercard has reported that their “contactless transactions are 63 percent faster than cash and 53 percent faster than using a traditional credit card.”

What Makes Contactless Payment So Fast?

Contactless payment is efficient not only because of its technology but its overall design. Some of its advantages include:

• PIN bypass – Contactless payment typically bypasses the need to input a PIN number (as well as the frustration of forgetting it). 
• Accessibility – To make matters even easier, you can go contactless with the same device you use for just about everything else—your smartphone, of course. Digital wallets like ApplePay can send and receive contactless payments, giving customers two ways to pay fast.
• Less dependent on physical features – With contactless payment, stripes and chips are not nearly as important as they are for cards, which means you won’t have to hold your breath at checkout when one or both of them wears out. 
• Offline functionality – Contactless payment terminals are usually, though not always, offline. When a terminal is offline, it puts the transaction first, requesting and confirming the full authorization process later.

How Long Does it Take for a Transaction to Post to My Account?

No one wants to accidentally overdraw their bank account. So, how long will it be before the money a customer spent on a meal at your place of business actually exits their account?

The short answer is two to four business days. 

That average is a little bit higher than chip-and-pin cards which take two to three days to post. The difference stems from the fact that chip-and-pin cards go through an authorization process before finalizing transactions, while contactless payment conducts this process at a later time. This is what the usual authorization process generally entails: 

• Card payment – A customer inserts or swipes a card for payment at the POS terminal.
• Message to acquiring bank – The POS terminal sends a message to the business’ bank (“the acquiring bank”). 
• Message to network processor – The acquiring bank sends a message to a network processor. The network processor is affiliated with the customer’s card and is able to confirm or deny the use of the card.
• Authorization – If the processor confirms, the acquiring bank authorizes the transaction.
• Pending – After authorization, the transaction appears as “pending” on the customer’s bank account.
• Processed – Once processed, the payment is no longer pending.

Going through the entire authorization is crucial when making high-dollar purchases. It also takes care of some of the work that offline contactless payment typically deals with later. 

But that potential extra day of processing time is more than worth the convenience of versatility of contactless phone payment.

Does Speed Come at the Cost of Security with Contactless Payment?

No. Contactless payment still requires a verification process. The card or smartphone communicates credentials to the POS terminal via radio frequency identification (RFID) to do this. 

Some of the things that the terminal looks for are:

• Has the card been reported lost or stolen?
• How many times has the card been used today?
• How much has been spent with the card in the last 24 hours?
• Are there any other assigned rules that have been overstepped?

If any of these credentials—also known as contactless payment rules—have been overstepped, the terminal may request the customer to insert a pin or even decline the transaction. 

Note: Merchants are responsible for adhering to PCI contactless payment rules.

Timelines for Buyers vs. Sellers

While the initial transaction takes a matter of seconds, it takes time for money to enter and exit the relevant bank accounts.

Depending on whether you are the customer or business owner, a “processed contactless payment” will mean something different.

The Buyer’s Timeline

The buyer considers a payment processed when the transaction appears on their online banking account and is no longer pending for review. 

 A customer could see a pending charge for a contactless payment on their account the day after a purchase. More commonly, however, the payment will be posted two to four days after the transaction took place.

The Seller’s Timelines

The seller considers a payment processed when funds have been distributed from the buyer’s bank and have settled in the company’s account.

On average, it takes three days from the time of purchase for a contactless payment to process. During this time, a third-party processor receives a request for verification, authorizes or declines the requests, secures funds upon authorization, and releases the funds to the seller.

GoTab’s Contactless Payment Solutions

Having a contactless card reader at your place of business guarantees speed, service, and security. And when customers feel catered-to and confident, they’re that much likelier to come back.

Are you ready to learn how to modernize your business with contactless payments?

At GoTab, our low-cost, card-present terminals offer operators and their staff a complete, touchless experience. And guests who prefer the traditional payment process can still pay the old way. Request a free demo today!

Sources:

• Visa. Contactless Payments. https://usa.visa.com/pay-with-visa/contactless-payments/contactless-payments.html
• Forbes Advisor. Banking After Covid-19: The Rise of Contactless Payments in the U.S. https://www.forbes.com/advisor/banking/banking-after-covid-19-the-rise-of-contactless-payments-in-the-u-s/
• Just Ask Thales. 10 Things to Know About Contactless Technology. https://justaskthales.com/en/10-things-to-know-about-contactless-technology/
• Investopedia. Credit Card Posting. https://www.investopedia.com/terms/c/credit-card-posting.asp