Contactless payments or ‘wave and pay’ are made from the card to the card terminal without a PIN needing to be entered. The contacless card is simply waved near the terminal and the payment is made. Contactless payments are meant for small purchases for example where the total is below £15 and offer a very convenient option for customers.
The technology used is near field communication (NCF) which allows the card data to be transferred at short distance (typically 4cm) through a form of radio communication. There are currently 20 million contactless cards in circulation in the UK and this number is set to increase following successful trials.
in 2012 major retailers like ASDA and the Co-operative are trialling the systems in store. Transport for London are currently introducing contactless payments on buses, trains and the underground.
The advantage for both customers and retailers is the speed of the transaction which is the fastest form of payment currently available, faster than cash. There have been some security concerns regarding accessing data on the cards illegitimately with thieves able to access card data from handheld card readers. However, measures have been taken to increase card security.
As well as contactless cards mobile payments have also recently entered the market. Providers such as Google Wallet and ISIS have enabled mobile phones to be used to make payments. Mobile payments work in the same way as contactless cards, using NCF to transmit data to payment terminals. The phone does need to have the right technology and NCF is only available on a limited number of handsets at present though this is set to increase.
In Germany contactless “girogo” cards can be used for payments of €20 or less.
Contactless cards will soon be available in France. In Jan 2012 French retail banking group Credit Agricole announced a programme to roll out contactless cards. Transactions under €20 can be contactless, for anything over €20 a PIN will be required.
Contactless payments are being trialled in Dublin.