Can you take card payments on your phone without buying a reader?

Summary

Yes, as long as the customer taps. An iPhone XS or later, or an NFC-equipped Android phone, can take contactless cards and phone wallets through a processor's Tap to Pay feature with no extra hardware. It cannot take a chip card that has to be inserted or a swiped card, and on Square it cannot take payments while offline. Some processors also add 10¢ to every Tap to Pay sale, which is how a reader can end up paying for itself.

Which phones qualify

Each processor sets its own floor.

Square: iPhone XS or later on iOS 15.5 or later, and most Android devices on Android 9 or later with NFC.
Stripe: iPhone XS or later. On Android, the phone must run Android 13 or later, have an NFC sensor, not be rooted, and have had a security update in the past 12 months.
Helcim: iPhone XS or later, for US merchants.
PayPal app: iPhone XS or later, and Android 8.0 or later with NFC and Google Play services. Tablets are excluded.

Stripe's version is a developer tool. To use it on iPhone, a business has to build its own app and submit it to Apple for approval. Square, Helcim, and PayPal offer it inside apps a shop can download and use as they are. Apple adds that some contactless cards may not be accepted by a given payment app and that transaction limits may apply.

When the 10¢ surcharge buys you a reader

Square charges the same 2.6% + 15¢ for a Tap to Pay sale as for a tap on its $59 reader, so on Square the reader buys you chip cards and offline mode, not a lower price. Stripe and Helcim both add $0.10 per authorization for Tap to Pay on top of their in-person rate. PayPal's Tap to Pay page lists 2.29% per transaction with no monthly or setup fee.

For a stall doing 150 sales a month at $20 each:

Square, phone only: $3,000 x 2.6% + 150 x $0.15 = $100.50 Stripe, phone only: $3,000 x 2.7% + 150 x ($0.05 + $0.10) = $103.50 Stripe, M2 reader: $3,000 x 2.7% + 150 x $0.05 = $88.50

The Stripe M2 costs $59 and saves $15 a month at that volume, so it is paid off in about four months. Helcim's reader costs $199 against the same 10¢ saving, which takes about 13 months at 150 sales.

Chip cards and swipes

PayPal says it plainly on its Tap to Pay page: choose a card reader if you also need chip or swipe payments. Square's reader takes chip and contactless. Helcim's Card Reader takes chip and contactless but has no swipe slot, and for HSA cards Helcim recommends its $349 Smart Terminal instead.

Selling where the signal drops

Square's offline mode works on its Reader and Stand, not on Tap to Pay or keyed entries. On the Reader, offline payments are declined if the device is not back online within 24 hours of the first offline sale, and the seller carries any expired, declined, or disputed payment. The seller can cap each offline transaction anywhere from $1 to $50,000, which limits how much one bad card can cost at an outdoor event.

Sources

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Written by Kaz (pen name). Figures are copied from providers' published pricing pages on the dates shown. We have not used these products. Corrections: contact form.