New Technology: Contactless Credit Cards

7th February 2011

Credit cards are incredibly popular with the adult population for a number of reasons. Firstly, they offer a supply of credit, so customers are able to essentially spend money before they deposit it into their bank account, and then pay it back in instalments. Credit cards provide security for your money: it is a lot safer to carry around a bank card than a wad of money prone to theft. They are also convenient, quick and easy to use.

But credit card companies have decided that credit cards with the traditional magnetic strip aren't quick enough. A new type of card is now on the market today - the contactless credit card. These are designed to allow the cardholder to make quicker transactions.

Rather than having to insert the card into a machine, or swipe the card, a contactless credit card can simply be scanned. This new technology can take around ten seconds off the time it takes to make an average transaction. Indeed, they tend to be around twenty seconds quicker than paying in cash.

The financial company Visa is one offering the use of contactless credit cards. 'Visa payWave' allows customers with a Visa credit card to make much quicker purchases. Transactions below the value of £15 can be made without the signature of the cardholder, and over 4 million contactless credit cards have been issued by Barclays alone, with many credit card companies following suit. As of March 2010, there were 20,000 payment terminals capable of accepting payment using contactless technology, including branches of Caffe Nero, Pret A Manger and Boots.

MasterCard, another top company that issues credit cards, is also taking advantage of the new technology. MasterCard Tap & Go only requires its credit card users to tap their cards on the scanner at the checkout, and wait for the beep and the green light that indicates the transaction has been successful. Payments under £10 require do not require a PIN to be successful - however, the four-digit code is requested at random for higher-value purchases to enhance security.

Contactless credit cards claim to be far more secure than regular cards. The data transmitted in the transaction process are subject to high security standards, leaving credit card fraudsters with little opportunity to steal your bank details. Triple DES encryption makes the thieves' jobs impossible. As well as this, contactless credit cards don't transmit your card number: a special chip within the credit card creates a number unique to the transaction. Even if a fraudster did intercept this number, it would be completely useless to them, even after decryption.

Retailers have good reason to make the use of contactless credit cards in their stores. A 2004 study into the cards showed that in one shop, the number of transactions rose by one percent after the introduction of the technology. Even more significantly, consumers using the card spent around 15% more. It seems the convenience provided by contactless credit cards somehow encourages customers to unconsciously spend more. So beware - remember the cards are saving you time, not money!

In shops where large queues are the norm, contactless card technology would definitely be an advantage. The time saved in transactions would reduce queuing time enormously. Customers won't have to queue for as long, and more will be tempting to make purchases, so the store will benefit - everyone's a winner. Particularly with the Christmas period coming up, shops will be overflowing with time-strapped consumers - in circumstances like these, contactless credit cards could be the way forward.

If you find yourself short on time whilst out shopping, it may be worth finding out whether your credit card company offers contactless credit cards. Don't forget about the added security they give to your bank account. In an era of technological progression, they could be the next big thing.