WE ARE all hurtling towards a contactless future — whether we want to or not. Last year the number of “tap and go” card transactions, which do not require a Pin number to be entered, reached 1bn, compared with 319m in 2014.
Not everyone, however, wants to sacrifice inserting their secret four-digit code, and the sense of security it provides, for the speed and convenience of a contactless card.
But increasingly they are being given no alternative. An investigation by Money has uncovered a worrying trend among banks and financial service providers towards forcing their customers to have a contactless card.
Recently the Financial Ombudsman Service upheld NatWest’s decision to refuse a customer’s request for a non- contactless credit card. “Mr B” had complained about the decision of the high street bank and listed a number of reasons why he disliked contactless, such as the security of the new payment system.
He is not alone. A survey by the consumer group Which? found 83% of its members agreed that people should be able to opt out of contactless technology.
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Royal Bank of Scotland, which owns NatWest, confirmed that its credit card customers cannot get a non-contactless card even if they request one. With a debit card, it is possible.
Why was the request for a non-contactless card refused?
Last year Mr B’s credit card was due for renewal and NatWest sent him a contactless one. He said the bank had done so “without consulting him and without providing him with any alternative”.
NatWest told the ombudsman that it was a commercial decision to issue contactless credit cards and its terms and conditions allowed it to do so.
The customer complained that he was “being forced to use a product” that he had “deep reservations about”.
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“There are no exceptions”
The ombudsman concluded: “We are not a regulator and we do not have the power to interfere with that decision. NatWest has confirmed that all Mastercard credit cards it issues now contain a contactless chip. There are no exceptions.”
It added: “Mr B has reservations about the security of contactless payment technology, and his reservations remain in spite of NatWest’s assurances about the safety of contactless cards. But [we] do not consider that NatWest was at fault in issuing him with a contactless credit card. It is for Mr B to decide whether or not to use it.”
Contactless on the rise
There were 1.05bn contactless transactions in 2015 — a 225% rise on the previous year, according to the UK Cards Association. The amount spent using contactless rose more than threefold to £7.75bn, partly because the spending limit per transaction was raised from £20 to £30 in September.
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This trend is expected to continue as more of us move to using “tap and go” plastic. Many card providers offer incentives, such as TSB’s current account, which provides 5% cashback for contactless purchases on the first £100 made each month until the end of this year.
Banks anticipate a further shift towards contactless payments. Lloyds Banking Group said: “We expect the majority of customers to have contactless cards within the next two years, as we will replace expiring cards with contactless ones.” Lloyds still offers customers the option of not having contactless technology.
Can I opt out?
It depends on your provider. As Mr B found, RBS and NatWest do not allow non-contactless credit cards. Barclaycard also said its customers cannot opt out. Virgin Money responded: “There is not an option to have a non-contactless credit card.”
Nationwide, TSB and HSBC allow customers to request a non-contactless card, whether it is credit or debit. Santander said: “Customers will automatically receive a contactless card for our standard debit cards and 123 credit cards; some other debit cards are not automatically issued as contactless. Customers can request to have a non-contactless card.”
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How safe is the system?
If your contactless card is lost or stolen, report it to your provider immediately, as you should with any card. Your bank or building society should provide a refund for any transactions made by criminals.
But even when a card is blocked, small contactless transactions can still go through. Keep a close eye on your account.
Fraud on contactless cards is low but rising fast. In 2013 it amounted to just £69,873; in the first six months of last year, it was worth £516,500, according to Financial Fraud Action UK.
Andrew Hagger of the financial analyst moneycomms.co.uk said: “The main reason that some people don’t want a contactless card is because they have security concerns, often caused by unhelpful scare stories. When chip and pin technology was introduced 10 years ago, there were similar concerns about lack of security and a reluctance among some consumers to embrace the technology — but now, for most people, it has become second nature.”
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Other banking customers simply do not wish to use the technology. One reader recently wrote to Money complaining that having the contactless function on his card meant he had been charged transport fares, even though he has a Freedom Pass (for older people or the disabled). This is because his debit card unintentionally registers when he taps his wallet on the reader.
If you and your partner have a joint bank account, with contactless cards, this may offer an additional layer of complication in the event of a break-up. Even if a joint account is closed, the cards may still be used for contactless payments until they reach the expiry date. In theory, one partner could continue spending money, leaving the other jointly liable.
Do you like using contactless, or avoid it like the plague? Email: money@sundaytimes.co.uk