A contactless transaction is a single payment made using contactless payments technology: the customer holds a card, phone or wearable near a terminal and the payment details pass over a short radio link, usually near field communication (NFC). The main entry describes the technology, history and security in full; this entry covers how the narrower term is used.
In card processing, "contactless transaction" refers to one payment event and its data, as opposed to the payment method in general. Such a transaction is a form of card-present payment and normally uses the same EMV security as a chip payment, with a one-time cryptogram generated for each tap. Scheme reports and merchant statements often count contactless transactions separately from chip, magnetic stripe and online payments.
Low-value contactless transactions are often approved without a PIN, up to a contactless transaction limit set nationally. Payments made through a phone wallet can be verified by the phone's own biometric check, so they may not be subject to the same limit.