The New Contact-less Payment Card

Almost since the introduction of credit, charge and payment cards in the UK a debate has raged as to when the concept of a money-less society will take hold. Despite the fact that we now spend trillions of pounds a year on our credit, charge and payment cards, this money-less society has never really taken hold in the UK. One major reason for this may be the fact that we don’t feel entirely safe in the UK without the look/feel touch of having ‘actual’ money in our pockets. It could also be the procedural steps of completing a credit, charge or payment card transaction is too drawn-out for small item purchases. If it the second of these, then starting this month the days of a cash-less society in the UK may just have taken one big step forward!

Starting June 2006, and running throughout the remainder of 2006, the Royal Bank of Scotland’s Edinburgh headquarters will start to pilot a new contact-less debt card. Under the pilot scheme, cardholders will be able to make contact-less purchases with retailers piloting the scheme within the compounds of the campus of the headquarters. Essentially the scheme works by transmitting data via an aerial that is built into the payment card and which a data reader in one of the outlets receives via a signal. Once the data reader reads the signal being transmitted from the payment card aerial, all the user then need do is to wave the payment card at the reader and payment for the good being purchased will then be deducted from the balance of the card user.

Currently two limitations exist with the new contact-less payment card being piloted by Royal Bank of Scotland. Firstly, at £ 10, the maximum payment threshold amount is fairly small. Any payment in excess of this £ 10 threshold amount will need to be transacted in the same pin and chip manner that all other payment transactions currently undergo today. Secondly, the pilot radius is very small – and costs for adopting the system over a larger area (such as the entire UK) may be prohibitive.

However, assuming both of these hurdles can be overcome, and further assuming that other payment and credit card providers and retailers take up the technology now being piloted by Royal Bank Scotland, the days when money is an obsolete thing of the past may now no longer be a concept within the realms of science fiction, but firmly placed in the here and now. Pushing this forward are two further major pluses with this contact-less payment card scheme; first, living in days where the smallest bank note available to us may only be a £ 10 note may encourage us to use the contact-less payment card in order to avoid having to carry large chunks of changes around in our pockets and purses; second, the uptake of volunteers among the Royal Bank of Scotland’s staff for the pilot scheme has been phenomenal, with one in three of the bank’s head office staff signing up to participate in the pilot. As such, even where no extension to the maximum limit can be found, credit and payment card providers may still see a niche in a very competitive market to offer their clients.

Richard Smith
5th July 2006

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