Contactless payments: the end for cash?

by Rebecca Rutt on 22 September 2012  |  24 comments
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With the sudden rise of contactless technology, both through your cash card and mobile phone, how long will it be before we rule out using cash altogether?

The first time I found out my card was contactless was when I was buying coffee and realised when I left the café that I hadn’t put in my pin number.

This was about six months ago and now I use it about once a week. Contactless payments, where you pay for something with your card but don’t need to sign or enter a PIN, are becoming an ever more popular way to make purchases.

In fact the technology is being produced at such a fast rate that in the next year 44% of retailers will offer in-store payment points, according to MasterCard.

This means that we will soon be able to use contactless cards or even their smartphones to make purchases in almost half of high-street stores.

How does contactless work?

Whenever you buy something and pay with your card you now have the option in most shops to use the contactless element of the card, so long as your card has that capability.

Certain debit, credit and prepaid cards can be used in this way for purchases of anything up to the value of £20. It’s been designed to make paying for things easier and quicker as the transaction time is much shorter if you just swipe your card, rather than writing out a signature or typing in a PIN.

When you press your card to the card machine, the money is automatically debited from your account or added to your credit card bill. Most new cards are now issued with the contactless technology - you can tell because there should be a contactless logo on it, like the image on the left.

Where can I use it?

The number of retailers where you can use this technology is growing all the time. While it mainly includes cafes such as Pret a Manger, Caffe Nero, Subway and Eat, some larger retail chains like Tesco, Boots, Ikea and Clintons are also getting on board.

Is it safe?

Credit card firms claim that contactless is just as secure as chip and pin technology. If unusual activity is detected, the user will be prompted to enter in a PIN.

The fact that the card doesn't actually leave your hand when you make your payment makes it more secure too.

How do I get one?

Most new cards will automatically have this technology installed. If not, you can call your provider and ask for a new card to be sent out.

Contactless on your mobile

As well as using your cash card to pay for things with contactless technology, you can also now use your mobile phone to do a similar thing, thanks to the two schemes below:

Barclays PayTag

Barclays was the first to launch its contactless service, Barclays PayTag, back in April.

It’s a tiny plastic tag which you can stick on your phone (or anywhere with a flat surface), and it includes the same technology as contactless cards. This is then held over the card machine and the payment goes out in the same way. It’s free to use and although it’s only available to a small group of Barclaycard customers at the moment, it soon should be open to all of them.

Read Barclaycard PayTag: new way to pay with your mobile phone, no matter how old! for more.

Orange Quick Tap

You can also use Orange Quick Tap to pay for things with your phone. This works again by tapping your phone on a card machine and the money goes out. However, the technology isn’t available to everyone and to use this you need a phone such as the Samsung Galazy S3, which has the Quick Tap technology already in place.

The difference with this service is you need to add funds to a mobile payment account before you can start making purchases. You can add anything from £5 to £100 using a MasterCard or Visa debit or credit card.

Using your mobile to transfer money

Transferring money between bank accounts is something I used to only ever do when I was at my computer with my card reader. Now it’s a lot easier and with a tap of a button I can access my account from my phone and do this instantly.

There are quite a few systems around for this such as O2 Wallet, the Barclays Pingit app, Google Wallet, and PayPal.

These work by letting you transfer money between accounts, pay other people, and shop – all from your phone.

What do you think? Is cash on the way out? Will we all be adopting contactless payments in the future? Let us know your thoughts below.

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