News & Views - Savantor

UK Contactless launch

Wednesday, 01 November 2006

Details have been announced at APACS of the initial UK roll out of contactless debit cards, credit cards and pre-pay cards for payments under £10.  An extension to the existing Chip and PIN EMV network, MasterCard's PayPass and Visa's contactless system will allow users to pay for low value items by waving their card in front of an RFID sensor on a point of sale or vending machine.

The roll out will commence in London with over half a million new cards issued, and 4,000 updated chip and PIN readers with built-in RFID sensor sent to over a thousand shops within the central city area and Docklands.  This phase is scheduled to start in September 2007 and continue to April 2008. Assuming all goes well, and the technology is tried and tested having been implemented elsewhere notably the US, the roll out to the rest of the UK will start Q1 2008.  APACS expect that by 2011, 70% of debit cards and 45% of credit cards will have been converted to support contactless payments.

The initial concerns should concentrate on communication rather than technology issues.  In the UK the industry has spent the last 3 years encouraging cardholders to remember and use their PINs as this is safer than signature and now we want to change the message to 'just wave it – trust us it will be ok'!  It is to be hoped that a little honesty will also be expressed in messages to cardholders over concerns on security.  If the card is stolen there is no way to prevent the thief using it in contactless mode up to the limit imposed by built in counters and the upper transaction amount limit.  The cardholder needs to be reassured that there will be no risk to their current account funds beyond this and that they will not bear this loss as the banks will take liability.

Given the size of the cash market and the estimate that handling of physical cash is a £4 billion drain on the economy it is clear that the government and banks are serious about this initiative.

One aspect where cash still has the advantage at the moment is the ability to make person to person payments which cards cannot do.  This is an area where the mobile phone operators can make ground by offering contactless payment on mobiles.  Should be an interesting next 12 months!

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