Our smartphones used to depend on an external device to accept card payments. Today, mobile phones can completely replace a dedicated card reader and process transactions on their own.

How so? Through the contactless technology Tap to Pay on iPhone/Android available in your pocket.

In this article, we’ll explore how these card payments without an EFTPOS machine work, alongside the options available in Australia.

How does Tap to Pay work?

Tap to Pay is a term for accepting contactless payments on your iPhone or Android smartphone without a separate card reader. It is not the same as tap and go, a term popularised in Australia to describe contactless payments in general.

To accept contactless payments (cards or mobile wallets) on your phone, you need a mobile device with a Near-Field Communication (NFC) antenna built in. Practically all new smartphones have this. Then you subscribe to a merchant service with Tap to Pay on Android or iPhone.

When subscribed to the service, you install a special app on your phone and log in with your merchant credentials. This is enough for a smartphone (or tablet, if compatible) to receive contactless payments.

Then all you need to do is open the app, enter a transaction amount and touch the confirmation button. The customer holds their mobile phone or contactless card close to your smartphone to process the transaction.

Image: Mastercard

cobro móvil tap to pay a una tarjeta de crédito mastercard

Essentially, the smartphone – like EFTPOS machines – transmits transaction data to a payment processor over the phone’s internet connection. When authorised by the relevant banks, card issuers and other mediators, the transaction is complete.

Funds are subsequently transferred to your business account, typically within 1-3 business days depending on the specific merchant solution.

Other names for Tap to Pay

Tap to Pay is sometimes confused with contactless payments in general.

To distinguish it from card machine payments, Mastercard officially refers to the feature as Tap on Phone whereas Visa calls it Tap to Phone.

Payment experts sometimes call it softPOS (software point of sale), a term that has proven too technical to take off among users.

We’ve seen a clear shift among industry players towards adopting the name Tap to Pay on iPhone or Tap to Pay on Android, probably kicked off by Apple’s decision to first name their tech Tap to Pay.

Tap to Pay solutions in Australia

In Australia, only few businesses use Tap to Pay for payment acceptance, mainly because it’s only recently that merchant service providers started to offer it.

Now, Australian merchants have quite a few options for turning their smartphone into a card reader – here’s an overview:

Tap to Pay solutions in Australia
Solution Android iPhone Costs
Square Yes Yes 1.9% /transaction, no monthly fee or contract – See offer
Zeller Yes Yes 1.4% /transaction, no monthly fee or contract- See offer
Westpac Yes Yes 1.4% /transaction, no monthly fee
ANZ Worldline Yes Yes 1.3% /transaction, other fees may apply, no contract
Tyro X Yes 1.4% /transaction, no monthly fee
NAB Yes X 1.4% /transaction, no monthly fee or contract
Airpay Yes X 1.79% /transaction, $29 one-off licence fee, 1-year contract
Stripe SDK* only SDK* only 1.7%-3.5% + $0.10 /transaction,
no monthly fee or contract
Adyen X SDK* only Custom fees

* Software development kit (SDK) for integrating softPOS in your own payment app.

As usually happens when a new technology appears in the industry, payment providers do not want to be left out, so most of the popular EFTPOS companies have launched their own Tap to Pay option over the last year. These solutions are either dedicated apps or an added function in existing apps.

Among those available in Australia, Square, Zeller, Westpac and ANZ Worldline are the only providers offering Tap to Pay out-of-the-box on both iPhone and Android devices.

At Square, it’s available in the Point of Sale app, which also connects with Square Reader. The app allows you to send payment links and accept QR code payments too. Merchants signed up with Zeller can enable Tap to Pay in Zeller App.

Although Square offers the most adaptable, user-friendly features, its transaction rate of 1.9% for Visa, Mastercard, eftpos and Amex cards is not the lowest. Zeller, Westpac, NAB and Tyro charge 1.4%, also without monthly fees or a contract (in most cases). ANZ Worldline charges even less per transaction – 1.3% – but comes with hidden fees.

Only Android users can opt for NAB and Airpay, though we don’t recommend the latter because Airpay’s fees are higher and require a year’s commitment. In contract, Tyro only offers Tap to Pay on iPhone.

Image: Square

cobro móvil tap to pay con la app mypos glass de mypos

Stripe and Adyen are both intended for developers and large businesses wanting to add Tap to Pay functionality into their own software. We therefore don’t recommend it for individual entrepreneurs or small businesses that simply just need to accept contactless payments.

Is Tap to Pay right for everyone?

The short answer is: not necessarily.

As exciting as the idea sounds, tap-on-phone is only suitable in certain cases.

Consider these pros and cons of softPOS before you opt for it:


  • Ideal as a backup card reader

  • Useful for home deliveries

  • Handy for few, infrequent card payments


  • Only for contactless (not chip) payments

  • Can be unhygienic

  • Using a personal phone for business can feel risky

A couple of the disadvantages relate to customers having to touch and hold the phone.

Sometimes, a Tap to Pay app might ask for a PIN code, mainly when the transaction amount exceeds the contactless limit ($100 or $200 for physical cards). The merchant is then forced to give the customer the smartphone so they can enter the code on the touchscreen.

This is not the most hygienic solution, and customers may also be reluctant to enter their card PIN on a stranger’s phone if they’re concerned about security.

Some merchants may think about purchasing a phone to dedicate exclusively for this purpose, but then why not buy a card reader that’s cheaper and less likely to be stolen?

In addition, tap-to-phone only processes contactless payments, not chip cards that have to be inserted. If a chip card doesn’t have a contactless function, your smartphone will be useless.

Also, even the most modern smartphones need to be charged more frequently than dedicated card readers.

So when can it be a good solution?

Tap to Pay could be considered a secondary card reader for emergency situations (e.g. during technical issues with an EFTPOS terminal or WiFi) or to accept payments from customers who can’t pay in cash (if you try to be a cash-only business).

Card reading capabilities in a smartphone is also useful for home deliveries and shops, bars and restaurants with large serving areas. The portability of mobile phones is, in fact, the main advantage of Tap to Pay.

Is a card reader better than Tap to Pay?

Mobile card readers are inexpensive terminals linked over Bluetooth with a smartphone that’s connected to the internet. They are extremely portable and lightweight devices designed for the sole purpose of processing card payments.

Unlike a purpose-built card reader, a phone with Tap to Pay has many apps that not only drain its battery, but also make it more vulnerable to technical issues.

Image: Mobile Transaction

explicación de modalidad de cobro con datáfono móvil

Inexpensive card readers connect, via Bluetooth, with a smartphone to accept card payments.

Here are 3 of the most competitive card readers available in Australia:

The most popular phone-dependent card reader, Square Reader, can be purchased for $65 incl. GST. It has no contractual lock-in or monthly fee, just a pay-as-you-go transaction rate of 1.9%.

Key benefits of Square is its instant transfer option for an added fee, optional Tap to Pay on both iPhone and Android devices and its many complimentary payment tools without an ongoing commitment.

Well-known for its EFTPOS machines, Tyro recently launched Tyro Reader for the slightly lower price of $59 incl. GST. It doesn’t have a monthly fee or lock-in and only charges 1.4% per Visa, Mastercard, eftpos and JCB transaction (Amex costs more).

Smart Mini by CommBank is another alternative that is sometimes offered for free, but normally costs $59 with a transaction fee of 1.1% for Mastercard, Visa, American Express, UnionPay, JCB and eftpos cards. It may have hidden fees, but could be your most convenient (and cheapest) option if you already bank with CommBank.

Why mobile card payments are popular

Although no regulations in Australia require businesses to have a card reader or accept any form of card payment, many consumers avoid using cash. Still, some merchants are reluctant to accept cards.

That’s because banks and traditional merchant service providers often come with inflexible terms for small, new businesses with a limited transaction volume. This could involve monthly fees and myriads of EFTPOS fees affecting your bottom line.

Surcharging is a way to fund transaction fees, but may put off customers who don’t want to pay extra for using a card.

This is where smartphones have come to the rescue of small merchants. Mobile card readers and Tap to Pay are typically affordable and mostly without commitment or complicated fees.