Some Contactless Cards Still Suffering From Teething Problems

Proponents of contactless cards point to the opportunity for shorter, faster checkout lines and claim retailers with contactless card readers at point of sale terminals attract and retain more customers. However, issues and possible misunderstandings surround the technology.

Technovelgy and one Forbes correspondent identified temptations to increase spending as the downside of American contactless payment cards. Customers in Britain are more worried about inadvertent increased spending.

In a 2006 paper, soon after the cards were launched, Smart Card Alliance applauded increased spending, asserting neither temptation nor security were issues. Security features protect consumer and transaction information, offering advantages such as greater control and convenience for customers alongside higher throughput and lower costs for retailers, they said.

However, some customers at British retailer Marks & Spencer (M&S) have recently experienced duplicated purchases when contactless cards were too close to PIN cards. According to BBC's Money Box, several people who inserted chip-and-PIN cards received receipts for contactless cards a foot or more away. Using near field communication (NFC), machines are not supposed to read cards beyond 2 inches (5 cm). Some fear that more people have been double-charged and have not noticed. Research shows that cards can be read through material (e.g., purses) although they allegedly have to be presented to the terminal.

Visa Europe provides M&S’s technology and told Money Box that the incidents were "extremely unusual" but it was investigating concerns. American Express claims proximity doesn't result in accidental charges as customers have to hold cards directly in front of readers at precisely the right time for more than half a second. Randy Vanderhoof, Smart Card Alliance's Executive Director, assured RetailWire nothing similar has been reported as happening in the U.S.

Of 31 million+ contactless cards in the UK, almost 20 million come from Barclays or Barclaycard. Take-up has been slow, partly because of inaction from banks and retailers, but when price comparison site Gocompare.com surveyed 2000 adults in March, only six percent had made contactless payments with their card. The Guardian reports Gocompare found large numbers "wary of new payment technologies." One in four described the idea of contactless payments as "scary."

• Contactless credit card disadvantages - Technovelgy
• Contactless cards hit shoppers with phantom charges: string of complaints after customers paid for items when plastic was in their pockets - Daily Mail
• Contactless “charging errors” at Marks & Spencer - BBC
• Contactless payments: which banks are in touch - Guardian
• Contactless cards: how safe is your money? - Guardian
• Contactless payments reach “watershed moment” - Visa Europe
• The What, Who and Why of Contactless Payments - Smart Card Alliance
• Contactless payments – bad news for consumers? - Forbes
• Why contactless cards can leave you with a losing deal - Guardian
• Sifting the facts from the fiction about contactless cards - Guardian