Banking industry adopts contactless payments

The UK banking industry has confirmed plans for the national introduction of contactless technology on UK credit and debit cards for low value transactions.

The UK banking industry has confirmed plans for the national introduction of contactless technology on UK credit and debit cards for low value transactions. 

Contactless technology is being introduced on a number of payment cards from September this year, and will be available for transactions of £10 or less.

Customers will simply hold their upgraded cards up to a secure reader to make their payment in participating retailers, outlets and vending machines.

The roll-out will start in London, covering the City financial district and Canary Wharf. The initial launch will involve a mix of retailers and selected cardholders who regularly use their cards in these areas, either to buy goods or take cash out of cash machines. 

Visa Europe and MasterCard will lead the roll-out, said clearing services organisation Apacs.

After the initial launch, the upgrade will expand across London, followed by a gradual national upgrade in 2008. This will involve card issuers replacing debit and credit cards to their own timescales, and card-accepting businesses that decide to offer contactless transactions increasingly upgrading.

The first card issuers include Bank of Scotland, Barclaycard, Citi, Euroconex Technologies, Halifax, HSBC, Lloyds TSB, and Royal Bank of Scotland.

Industry estimates suggest that over five million contactless cards will be issued by the end of 2008, and that they will be accepted by at least 100,000 merchants.

Although making a contactless payment does not routinely require a Pin to be entered, the chip on the card will track activity, and as a security feature it will request a Pin “from time to time”, said Apacs.

Contactless technology will not affect customers’ protection under The Banking Code for fraud liability, stressed Apacs.

John Bushby, general manager for the UK, the Republic of Ireland, Nordic and Baltic countries at MasterCard Europe, said, “Our experience testing MasterCard and Maestro PayPass among staff at Royal Bank of Scotland's offices in Edinburgh and London has shown us that consumers love the convenience, simplicity and security of being able to 'tap and go' when paying for everyday things such as newspapers, sandwiches and drinks.”

Cardholders do not need to do anything. They will be contacted by their card company and given full details as they join the roll-out.

More information is available from either MasterCard or Visa Europe.

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