Millions of UK credit and debit cards are already enabled with contactless technology, but most of us aren't even aware it exists. We explain how it works and what it means for the way you spend your money.
What is it?
Contactless technology is a means of making fast, secure payments of up to £15 without cash; you simply need to hold your credit or debit card near a contactless reader. There is not even any need for you to enter your PIN and the payment will be automatically deducted from your account or added to your credit card balance.
Contactless debit and credit cards use Radio Frequency Identification (RFID) technology. In layman’s terms, there’s basically a tiny antennae inside your card which transmits your details to the reader when your card is held over it.
It’s hoped that in time contactless technology will become a viable alternative to cash for paying for small transactions such as your morning take-out coffee, a newspaper or lunchtime sandwich.
The likes of Halifax, HSBC, NatWest are all currently trialling contactless technology, but Barclays are the only high street bank to have contactless debit and credit cards in circulation.
If you are a Barclays or Barclaycard customer, then the chances are that you already have one (check for the contactless symbol on the front) or will receive one automatically when your old debit or credit card expires.
If you’re not with Barclays, but want to experience the potential benefits offered by contactless debit cards, open a Barclays current account or apply for a Barclaycard to get one.
Where can I use it?
Your contactless card can be used wherever you see the special contactless symbol. There are currently approximately 20,000 shops in the UK who accept contactless payments, including chain stores like EAT, Pret a Manger, Caffe Nero, Threshers etc.
Although mainly centred in metropolitan areas like London, there are plans underway to roll out the scheme to retailers throughout the UK in the near future.
What are the main benefits
The main attractions of using a contactless debit or credit card is that it provides a quick and easy means of making low value purchases as not having to enter your PIN will cut down on queuing time.
Also as many smaller retailers often have a minimum spend on debit and credit cards, your contactless card will eliminate the hassle of getting money out of a cash machine to buy something small. That’s also good news for those of us who don’t like being weighed down by cash in our pockets or purses.
Are their any drawbacks?
Cynics may suggest that it's already easy enough to make purchases on your debit card and don’t see any need for making it even easier.
Of course, the less obstacles placed between the consumer and their potential purchase, the less chance they have of exercising a ‘judgment call’ and deciding that perhaps they don’t really need that over-priced latte or latest issue of a celebrity magazine. There are fears that the introduction of contactless technology could lead us to wasting money on items that we don’t really need.
For those of us that like to keep our own accounts or the self-employed, you will only receive a receipt for your contactless transaction if you specifically ask for one. Also it is not possible to get cashback when you make a purchase with your contactless card.
Is it secure?
With regards to security, Barclays contactless debit and credit cards use exactly the same secure Visa payment technology as their Chip and PIN transactions. As an extra precaution, you will occasionally be required to enter your PIN just to confirm that it really is you making the transaction.
It is also hoped that the maximum purchase limit of £15 will actually deter fraudsters as they will be unable to purchase the kind luxury items that they can sell on or return for cash without your PIN.
Fears of making accidently payments by simply passing within range of a reader are allayed by the fact that your card has to be held over a reader for a number of seconds. Also the typical range of a reader is a matter of inches rather than feet.
The fact that the card doesn’t actually leave your hand is also being heralded as reducing the chances of theft. However, this is rather a moot point as many retail outlets have already introduced a ‘hands off’ policy for staff with regards to Chip and PIN transactions.
Security concerns
When contactless payment technology was first launched in America a few years ago, there were security concerns arising from the fact that the transmitter inside the card did not have an ‘off’ switch. This gave rise to fears that thieves could capture your details as you walked down the street simply by holding a reader in the proximity of the card in your pocket or purse. As well as whether someone could steal your details without even having to open the letter containing your newly posted contactless card or catch your data out of thin air as it was being transmitted to an in-store reader?
The good news is that second generation cards - like the ones currently in circulation – only transmit your card number. Because personal details such as your name or security code are not transmitted by the RFID technology, even if your card number is captured by a malicious reader there is very little damage they could actually do with it. Also your average fraudster tends be rather work-adverse and unfortunately there are far, far easier ways already out there for capturing your personal data.
However, there may be greater security concerns about contactless technology if we go down the same route as Asia and start putting chips in mobile phones or even watches!
If you do have genuine concerns about falling victim to a malicious reader, then you can always protect your contactless cards with an RFID blocking sleeve or wallet which are readily available on the internet.
