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The 'One Pulse'
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Contactless Payment Credit Cards – Touch and Go!
Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk
Are contactless payment cards the face of the future? Do they mark the death of cash? We investigate…
Visa calls it ‘PayWave’ whilst Mastercard calls it ‘PayPass’, but both are referring to an innovative new technology which allows you to pay for low value items simply by holding your credit card over a special reader.
No longer must we fumble with our change at the checkout! No longer must our pockets be weighed down with coppers! The future is here!
But what are the dangers? In this guide we will look at exactly what these cards offer, as well as assessing potential security risks.
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What is a contactless payment credit card?
A contactless payment credit card is a specially adapted card that allows you to make payments of £10 or less simply by placing your card in front of a secure reader rather than typing in your PIN.
Instead of storing data on a magnetic stripe, the contactless payment card stores its data on a microchip, embedded in the card’s plastic, which is fitted with a radio antenna that is capable of transmitting the data to a card reader without physical contact.
Taking less than a second to process each transaction, contactless payments are much quicker and more convenient than cash or traditional card payments. As a security measure, you will occasionally be asked for your PIN or signature to verify your identity.
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How do I use one?
When prompted by the retailer, hold your card next to the reader. The transaction will be confirmed by a single bleep, the illumination of four indicator lights and/or a display message confirming that your transaction has been successful.
Because it is a cashless payment designed for speed, you will not automatically be given a receipt, however you can still request one if you want one.
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Where can I use one?
You can make a contactless payment at any retailer which displays the following symbol:
At present, the scheme has been concentrated on retailers in London, with thousands of outlets including Krispy Kreme, Coffee Republic, Yo! Sushi, Books etc., and EAT now accepting contactless payments for purchases under £10. It is expected that many other retail outlets that currently require cash, such as convenience stores, fast-food restaurants, car parks and vending machines will switch to contactless payments in the near future. Barclays aims to have 20,000 shops accepting contactless cards by the end of this 2008.
To find shops near you that accept contactless payments, you can visit the Visa website or Mastercard website. Visa and Mastercard each have their own system, PayWave and PayPass respectively, but all contactless terminals will accept both PayWave and PayPass cards.
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What are the security risks?
Despite the ease of payments, card issuers have insisted that the security risks are fairly low. They assure that a retailer will not be able to accidentally take your payment twice from you account as the reader can only perform a single transaction at a time. They also claim that purchases cannot be made without your knowledge (for example, if you walk past the card reader it will not automatically activate) as your card must be within four centimetres of the reader and the retailer must have first entered the amount for you to approve.
Significantly, there are no limits to the number of contactless transactions you can make in a day (payments will be limited only by your maximum withdrawal limit). This has its advantages, but it also means that if your card falls into the wrong hands, it would be very easy for someone to make a lot of transactions very easily as they don’t need to know your PIN.
Having said this, most credit cards are protected by a 100% fraud protection guarantee which should cover you for any loss, theft and misuse. It’s always worth checking the small print here though as terms and conditions vary and you want to be sure that you are completely covered.
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Are they the next big thing?
Cash is not going to disappear overnight, but as more and more people are looking for speed and convenience in every aspect of their lives, these cards are set to become increasingly popular.
According to Which?, in the UK 80% of the 27 billion cash transactions each year are for items totalling less than £10 and if contactless payment cards do catch on, these payments would be revolutionised.
If you don’t live in the capital or travel to it regularly, then there’s probably not much point getting one of these cards just yet. However, there are plans to spread the scheme across the country (as well as plans to introduce it in France, Spain and Italy) so these cards are definitely a product to be aware of for the future.
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Recommendations
Described by Barclays as “the future of credit cards”, the biggest card on the market at the moment is the Barclaycard OnePulse (www.barclaycard-onepulse.co.uk). Widely advertised and available, the OnePulse is not only a credit card and a contactless payment card, it is also an Oyster card - a pre-pay card that provides the fastest and easiest way to travel in London. OnePulse offers a 14.9% APR and when opening the account you can choose between better balance transfer terms or better new purchase terms.
Both Natwest and RBS have been gradually introducing contactless technology by upgrading their existing customers to contactless payment cards. Both existing and new customers can register their interest and receive more information about contactless products at www.rbscontactless.com.
HSBC has offered contactless payment cards to selected existing customers who spend and live in the London launch area, and although contactless cards are not yet available on request, HSBC does plan to roll out the technology to all customers as the scheme spreads.
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Whatever next?
Future payment technology is evolving and with your mobile phone having taken over the function of numerous everyday tools like your computer, MP3 player and television, it unsurprising that the next thing it will replace is your credit card!
Yes, soon your humble mobile phone could be a superfast payment device, with a chip similar to those of the contactless payment cards embedded into the body of the phone. Nokia have already developed a model which can support the chip, whilst Samsung and Motorola are working on phones with e-wallet capabilities. Industry analysts predict that by 2010, half of phones sold will offer contactless payment.
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