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What’s so great about contactless cards?

The number of contactless credit and debit cards are constantly increasing in circulation across the UK, as are the number of retailers accept them. But what’s so great about contactless cards?

From the days of swiping your credit card and signing your name to inserting your chip into the card reader and entering your PIN, credit and debit card payments have advanced relatively quickly in recent years.

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Many credit cards and debit cards now let you pay using contactless technology. You just need to look out for the contactless symbol, which looks like a radio wave or like the WiFi symbol turned sideways.

This means that when you pay at retailers that accept contactless payments, you can hold your card up to or on the reader to pay for goods and services without signing or entering your PIN.

From September 2015, the amount that can be paid using a contactless card goes up from £20 and under to £30 and under.

Read our guide to learn how the technology works, whether or not it’s safe to use a contactless card and what the benefits are.

Contactless technology

Although the technology has been in use in a commercial capacity since the late 1990s, contactless cards, used in the way they are known today came to prominence in the UK in 2008.

Today there are millions in circulation with more and more retailers accepting contactless payments.

It works by emitting radio waves between the contactless credit or debit card and the contactless payment card reader. You can make the payment by either holding up your card within a couple of centimetres of the card reader, or place it flat on the card reader to process the transaction.

You will know to make a payment this way if you see the contactless payments symbol on the card reader, and if your purchase is £20 or less (or £30 less from September 2015).

Where can contactless cards be used?

Contactless card payments are becoming more widely accepted. Many major retailers and well known brands have been accepting contactless payments for a while, but you may find that even local businesses and very small retailers have started to accept them too.

If a retailer who takes card payments does not accept contactless payments, then you will most likely be asked to pay using the chip and pin method. Chip and pin will still be used when the payment is above the contactless payment limit.

You can find out more about which retailers are accepting contactless payments on the UK Card Association website, however, this list is by no means comprehensive, and only offers a basic guide to some of the biggest high street brands that are known to accept contactless.

So, always remember your PIN just in case the shop you plan to make a purchase in does not accept contactless payments.

Contactless cards can be used in more ways than simply paying for goods and services without entering your PIN.

More and more services are experimenting with the technology. In London, the Underground and Overground services, as well as London’s buses can be paid for using a contactless credit or debit card.

This means instead of using your Oyster travel card or buying a paper ticket, you can just tap your credit or debit card to pay for your journey.

However, what makes the technology more interesting is that it will make your contactless credit card work in a similar fashion to the pay as you go Oyster, which caps the amount you pay depending on the number of journeys you take.

There are likely to be more innovations to the way the contactless technology is used as it grows in popularity.

Risk of fraud with contactless cards

Of course, when payment becomes easier and more convenient, there is a risk that it could become less secure.

Chip and PIN was introduced to add security to payments because signatures could easily be replicated.

However, contactless cards could be seen as a step forward for convenience but a step backward for security.

The fear with contactless cards is obviously that someone could get hold of your credit card and buy something quickly without having their identification confirmed and without needing to know your PIN.

A fraudulent contactless card payment can be harder to trace than if someone used your details online.

Nonetheless, contactless payments have proved to be generally quite safe, with very few reports of any fraudulent activity.

First of all, there is a limit to the number of payments you can make with a contactless card if you make them all within a short period of time. This period of time appears to vary depending on the risk level assessed by each contactless card issuer or bank.

So if someone got hold of your contactless card and tried to make several payments in a short period of time, they would probably be asked to enter the PIN after around three to five purchases.

This means that the amount you could lose from fraud would probably add up to around £50 to £100 or so.

It’s also safer to take your card out of your wallet to pay, just in case you get ‘card clash’. If you have more than one contactless payment card or another card that uses similar technology like an Osyter travel card, or even an office access card, the signal could get confused and fail to go through.

Even worse, it could cause you to get charged twice, although this is still not as likely as the payment simply failing.

What are the benefits of using a contactless card?

The clearest benefits of using a contactless card is that it’s much easier and quicker to pay for items.

This can have a knock-on effect in shops that are usually really busy. So if you normally have a queue for your morning coffee, it should be quicker if everyone is using a contactless card to pay for it.

The same goes for getting on the bus in London or ordering a round in a busy pub.

Secondly, it means there’s less of a need to regularly carry loose change in your wallet.

If you’re concerned about the risks of fraud, then it might be worth paying another way.

You should usually be able to ask the retailer if you can pay by the chip and PIN method before you hand over your card.

Read more…

Compare credit cards with uSwitch

Find a credit card with contactless payments.

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