Tapping a card or smartphone at checkout has become second nature for many consumers. What began as a convenience feature has evolved into an expectation, with contactless payments now accounting for roughly 60% of U.S. transactions.
While the pandemic accelerated early adoption by raising concerns about shared touchpoints like point-of-sale terminals, contactless payments have entered a new phase of growth. Today, expansion is being driven less by hygiene concerns and more by the demand for faster payment experiences—as evidenced by emerging use cases in public transportation, event venues, and beyond.
As demand continues to grow, the focus has shifted from convincing consumers to adopt contactless payments to enabling merchants and public agencies to support them efficiently. Deploying and maintaining the infrastructure to support it remains a significant investment, especially in high-volume environments.
Even so, the technology is mature, widely available, and effective. For many organizations, the long-term operational and customer benefits far outweigh the implementation costs. This is why many major U.S. cities, Los Angeles being the latest, have deployed contactless payments across their mass transit systems.
Emerging Use Cases
One of the main reasons cities like L.A. and San Fransisco have invested in tap-to-pay transit systems is that they offer a significant upgrade over traditional prepaid fare models.
While prepaid products continue undergoing a staggering evolution, public transit is often better suited to open-loop payment systems. Instead of waiting in line to purchase and reload transit passes, riders can tap the cards or smartphones they already carry at a turnstile or gate.
Not only can contactless payments reduce friction for travelers, but they can also boost revenue for transportation agencies by lowering the operational costs associated with issuing, reloading, and managing proprietary fare cards.
Contactless transit systems can also encourage greater ridership among tourists and occasional users who may have previously found long lines and complex fare systems discouraging.
Large-scale events provide another compelling use case. Seattle’s decision to expand contactless payments across its transit network was driven in part by preparations for the 2026 FIFA World Cup, which is brining in an influx of visitors.
Beyond transit, high-friction environments such as stadiums, arenas, and entertainment venues are also primed for contactless payments. Many venues have already gone cashless to shorten checkout lines and improve throughput.
“I went with some friends to Charlotte to a soccer game for the team we support in Atlanta,” Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, told PaymentsJournal. “You walk in this big 70,000 seat football stadium, and the first thing you see is a massive banner that says, ‘We are a cash-free stadium.’ I go to enough games, and almost every stadium I’m in nowadays is cash-free. It creates a lot of openings for organizations to grow their revenue base through new kinds of payment activities.”
The trend has also reached theme parks. Disneyland has expanded its use of cashless payments to wait times at food locations, while many outdoor vending carts now accept only electronic payments.
Disney also expanded digital wallet functionality by allowing guests to add gift cards to their digital wallet, turning what was once a cumbersome physical payment experience into a seamless tap-to-pay transaction.
The Impacts of Digital Wallets
The Disney upgrade also represents one of the factors driving contactless payments ahead—the growing prevalence of digital wallets. Not only are there now more mobile and digital wallet offerings than ever, but the functionality of these products has also stretched far beyond electronic storage for card data.
Digital wallets are now hubs for loyalty programs, tickets, and passes. For example, Apple recently launched the capability to add previously unsupported items to its Apple Wallet. This includes QR codes from gym or ticketing apps that weren’t compatible with the mobile wallet, and even physical gift cards.
The footprint of digital wallets will also dramatically increase as more U.S. states and regions implement digital ID programs. This is one of the final steps that will allow digital wallets to be the central platform for nearly every consumer use case.
As payment credentials, tickets, loyalty programs, and documentation are unified into a single experience, phone-based contactless payments are expected to proliferate. Indeed, these types of payments have already become the norm in many regions.
For example, recent data from the UK found that roughly 57% of UK adults used mobile payments, and many of these purchases were for day-to-day, low-value transactions.
Beyond the Smartphone
Contactless payments are no longer limited to smartphones. The technology has expanded to an array of connected devices, including smartwatches, fitness bands, and smart rings. These wearables can make low-value and recurring purchases even more convenient by reducing the need to pull out a phone or wallet.
The growth of wearable payments represents another step toward what many have dubbed “ambient commerce,” where consumers can compete purchases with minimal interaction outside the bounds of the conventional checkout process.
At the other end of the spectrum, companies are also experimenting with payment devices designed to make everyday transactions more engaging. For example, Cash App introduced a “magic wand” payment device inspired by a social media trend in which consumers embedded contactless cards into homemade wands. The product is part of a broader lineup of NFC-enabled payment accessories available in a variety of form factors.
Beyond consumer devices, contactless payments have also gained traction in commercial environments. Fleet operators, for instance, are embedding contactless payment functionality directly into vehicles.
This approach not only reduces the risk of lost cards, fraud, or misuse, but also provides businesses with greater visibility into fleet operations and purchasing activity. Most importantly, it helps keep drivers on the road by streamlining routine fuel and fleet-related purchases.
“There’s something to be said for digital payments and reducing friction at the point of sale,” Ben Danner, Senior Debit Analyst at Javelin Strategy & Research told PaymentsJournal. “All of this is controlled in a unified mobile experience without having to reach in your wallet and fumble and look around for that physical card. Everything is going into this digital world and that goes a long way toward reducing friction.”
The Expanding Merchant Support
The growing number of contactless payment use cases would mean little if merchants lacked the ability to accept them. Fortunately, point-of-sale technology has evolved considerably, particularly among small businesses. Even as payment terminals have become more compact, they have also become more capable, with contactless acceptance now considered a standard feature.
Smaller merchants also have access to sophisticated vertical software-as-a-service platforms that can manage nearly every aspect of their operations, with payments serving as the foundation of many of these ecosystems.
“It’s important for the workflow of the business owner,” Don Apgar, Director of Merchant Payments at Javelin Strategy & Research told PaymentsJournal. “If you have a POS system, being able to take customer payments and have those payments posted and reconciled within the software is a big time-saver. It’s a great customer experience because it reduces the friction, you don’t have a separate device, and all those good things.”
Perhaps the most critical innovation in recent years, however, has been the rise of tap-to-phone.
Tap-to-phone transforms any smartphone into a payment terminal using its inherent near-field communication (NFC) capabilities. As a result, even freelancers, sole proprietors, and gig workers can accept contactless payments using devices they already own, eliminating much of the cost traditionally associated with payment acceptance.
“Several factors have driven the growth here,” Apgar noted. “Apple has finally unlocked the NFC chip on iPhones to enable developers to access it for Tap-to-Phone tech. JPMorgan Chase and U.S. Bank have started offering apps to small businesses with their merchant accounts, while fintechs like SmartCube are creating apps for enterprise merchants.”
“For small businesses, especially the very small end that includes the creator economies and side hustles, merchants can easily accept card payments anywhere on the same smartphone they already have in their pocket,” he said. “This tech is driving payment acceptance growth like Square did when it first debuted, except without the need for a dongle.”
The Infrastructure Barrier
Merchants are also expanding contactless acceptance by investing in unattended retail technologies such as vending machines and self-service kiosks. Along with creating a smoother customer experience, these systems can reduce the costs and risks associated with handling cash. As such, many self-service businesses that once relied heavily on cash—most notably laundromats—are increasingly becoming card-first environments.
While tap-to-pay infrastructure has become a staple of modern commerce, it also remains one of the primary barriers to adoption. Beyond the initial investment in compatible point-of sale systems, merchants must contend with hardware upgrades, subscription costs, payment processing fees, and ongoing operational expenses associated with accepting electronic payments.
Interoperability presents another challenge. The rapid expansion of the digital payments ecosystem has created opportunities for many financial services providers, wallets, and payment methods. Ensuring compatibility across these ecosystems can require additional investment, particularly for smaller businesses.
For many merchants, supporting a range of contactless payment experiences can require multiple systems or software integrations, making implementation costs a significant consideration.
Fraud, Security, and Regulation
Security has long been one of the main concerns surrounding contactless payments. Although AI-powered scams and organized fraud rings dominate today’s security headlines, criminals continue to exploit any available payment channel.
One emerging example is ghost tapping, a technique in which fraudsters use NFC technology in deceptive schemes to initiate unauthorized transactions or trick victims into approving payments.
In some cases, criminals impersonate charities or legitimate organizations and persuade consumers to tap their devices or payment cards for what appears to be a nominal donation or routine transaction. Once viewed as a niche tactic, ghost tapping has become prevalent enough that the Better Business Bureau issued a warning to consumers.
While ghost tapping represents a newer fraud technique, concerns surrounding contactless payments have long included risks associate with skimming attempts, as well as lost or stolen cards and devices.
These concerns have also influenced regulation. For example, the UK maintained a £100 limit on card-based contactless transactions until recently, and many financial institutions continue to evaluate the risks associated with higher-value contactless purchases.
Security concerns have also fueled interest in another emerging payment technology: biometric authentication. As consumers have grown accustomed to using facial recognition and fingerprint authentication on smartphones, biometrics are being explored as a way to both streamline checkout and strengthen security.
While widespread deployment still faces hurdles, namely the additional infrastructure investment required from merchants, the technology continues to move beyond pilot programs and into real-world testing.
Given the tech’s capabilities, it is likely that biometric authentication could be due for real-world implementation, even as soon as this year.
“Some people will get a chance to see it for real, and not just as a pilot somewhere in one place,” Christopher Miller, Lead Emerging Payments Analyst at Javelin Strategy & Research, told PaymentsJournal. “Last year I went to San Francisco, and I did a face pay in a pilot. But realistically, that’s one BBQ shop in one arena in one city in the United States. The point is that people will start to see this in the wild and not just in very controlled environments.”
“It’s not going to be commonplace, it’s not going to take over the world, but there will be people who do this, and that’s a step forward,” he said.
This positive movement for biometrics is just one aspect driving the broader adoption of contactless payments. Perhaps the most important driver is the consumer themselves, as the digital environment has dramatically raised expectations that purchases will be instant, secure, and transparent.
