Time to get rid of your wallet? Contactless payment explained
Nearly 33 million contactless debit and credit cards have been issued in the UK since 2007. More than a third of Which? members own one and, even if you don’t, you’re likely to soon.
But how does contactless payment work and is it safe from fraudsters? We tested whether your contactless cards can be used with confidence and took a look at wireless payment using your phone. In the future, you won’t even need a wallet when hitting the high street.
Contactless cards – the Which? Money guide
Contactless payment — what is it?
Contactless debit or credit cards allow you to pay for items worth £20 or less without entering your Pin. Every contactless card has a small chip in it that emits radio waves. To pay for something, you hold the card within a few centimetres of a payment terminal, which picks up a signal and processes the transaction. It’s a complicated process that works simply in practice.
Want to get your hands on a contactless debit or credit card? Well, you may already own one. Out of the 10 banks and building societies most commonly used by Which? members, Nationwide is the only current account provider that doesn’t offer contactless debit cards and has no plans to — Santander will start to issue them in the final months of 2013.
You can tell if your card is contactless by looking for a small logo on it made up of four small curved lines, similar to the wi-fi symbol you get on your computer or mobile phone.
Contactless payment — is it safe?
We asked Which? members about contactless cards and more than six in 10 were worried that a thief who stole their purse or wallet could make an indefinite number of contactless payments until they cancelled their card. This is unlikely to happen — our research suggests that a thief would only be able to spend £45-£100 before being asked to provide a Pin.
Even if you do have your wallet snatched, you’re only liable for the first £50 of what is spent using the card. In practice, your bank probably won’t make you pay this charge.
What about accidentally paying for something on a contactless card without meaning to? We put this to the test in a lab setting with eight payment terminals of the types used by retailers.
They all required you to hold a contactless card very close to the reader before a payment was taken. Half only took a payment once a card was within 2.5cm of the reader, three took payment within 1cm and the other terminal required you to tap your card on it.
Using these terminals, there was no chance of being charged for someone else’s purchase while waiting in a queue.
Contactless payment — shopping with your phone
Although contactless payment technology is most commonly associated with debit and credit cards, it’s becoming more prevalent in mobile phones. Near Field Communications (NFC) chips are already being installed in handsets like the Samsung Galaxy S4 and HTC One. To use them, it’s simply a case of tapping your phone on a shop’s wireless payment terminal, just as you would with a contactless card.
So should you ditch your wallet anytime soon? Not quite. NFC tech is pretty much as secure as contactless cards, you can set up a Pin code for each transaction and, if your phone is stolen, all payments can be blocked with a call to the relevant payment provider.
The trouble with NFC in phones is that the technology is fragmented and isn’t yet supported by enough shops. Phone networks, card providers and even Google all want a piece of this soon-to-be lucrative pie. The most prominent scheme so far is EE’s Cash On Tap, which runs in partnership with MasterCard and is accepted in over 230,000 outlets in the UK — a group that includes the likes of Boots, Eat and McDonald’s.
For NFC to really take off it needs to be widely available and, since Apple still hasn’t installed the chips in iPhones, you won’t see many people using this still fledgling technology.
Contactless payment – your thoughts?
So that’s the lowdown on contactless payments, but what are your thoughts on paying for products without using a Pin? Do you appreciate the added convenience or are you unconvinced by the security measures in place? Let us know in the comments section below.
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