Mark Harris
READIES, STEADY, GONE.... March 2007

Just wave and pay with NFC
Cashless payments: Mark Harris on the race to replace coins with cards

Cold hard cash just isn’t cool any more. Forty percent of women carry less than £20 with them and the Royal Mint reports that demand for coins in the UK is levelling off. But while credit and debit cards have long rivalled notes at supermarkets and restaurants, the battle to banish pocket shrapnel is just hotting up.

How many times have you whipped out your Switch card to pay, only to be told you have to spend at least £5 or £10? Even if a shop takes your plastic, the hassle of entering a PIN and waiting for a receipt seems ridiculous when you’re only buying a pint of milk.

This is set to change, with the arrival of near-instant, contactless payment systems. Of course, millions of Londoners already use high tech Oyster cards every day. The one-touch Oyster doesn’t need to swiped or positioned correctly, and can complete transactions at lightning speeds. It uses RFID (radio frequency) technology to allow fast, secure data transfer between the card and reader.

Every week, 38 million journeys on the Tubes and buses are paid for with Oyster - that’s over 80% of all trips. The banks queuing up to jump on the Oyster omnibus. Barclaycard is trialling a new ‘wave and pay’ card that combines Oyster and Barclaycard on one piece of plastic. On buses and trains, the card will act like a normal Oyster, and when buying pricey products, you’ll have the usual Chip and PIN system.

The ‘wave and pay’ card comes into its own for smaller purchases at burger bars and newsagents. If the bill is less than £10, you’ll simply wave the card over a special reader and get moving in seconds. The reason for the £10 limit is simple: rogue traders may prove able to scan cards without the owner’s permission.

But you won’t have to worry about having your whole bank account being cleared out, says Sara Conyer of Barclaycard: ‘The maximum contactless transaction is £10 and there are security measures to prevent a card being used repeatedly. If a number of payments are made consecutively, the card will ask for a PIN, just to ensure that it’s in the right hands.’

Barclaycard has already fitted a ‘wave and pay’ systems to taxis, and is promising a wider roll-out of the technology later in the year. However, a rival technology promises the benefits of RFID, plus added security and interactivity. NFC (Near Field Communication) is a new wireless technology that can transfer all kinds of data, not just payments.

Nokia has been working with NFC for several years, and is about to launch its first NFC mobile phone. ‘We studied people interacting with their new handsets,’ say Gerhard Romen of Nokia, ‘People touch, slide or tap them: it’s an intuitive way of dealing with anything new. NFC enables all sorts of touch technology. You could tap a movie poster to download film times, touch a headset to pair it instantly – or wave it over a reader for secure payments.’

The advantage of building payment into a phone is that you also have a screen and keyboard to play with. ‘This enhances and extends security,’ says Romen. ‘You can authorise payments with a PIN code and you’ll have the same payment protection as with a credit card.’ Unlike an Oyster card, though, phones can run out of power – leaving you virtually penniless. Nokia’s Gerhard Romen doesn’t see this as a big problem. ‘In trials, we found that people kept their phones charged up pretty much all the time. Most people seem to be more worried about not being able to receive calls than they are about not being able to pay.’

Such drawbacks are unlikely to prevent the introduction of contactless cash cards. Oyster cards allow people to move through Underground barriers three times faster than printed cards, and retailers can’t wait to introduce similar queue-busting technology in the High Street.

Whether or not you enjoy the rattle of coins in your pocket, the death of cash is definitely on the cards….

Ditching the cash…
Nokia 6131, approximately £200 pay as you go
As well the new NFC technology, Nokia’s cash-phone is packed with a full range of wireless goodies, such as MP3 music player, FM radio, Bluetooth and a 1.3MP digital camera.

Coining it in?

• 1.4 billion United Kingdom coins were issued last year.
• There are estimated to be nearly 27 billion coins in circulation, with a total face value of more than £3.4 billion
• The average life of a coin in active circulation is over 40 years.
• The Royal Mint’s history can be traced back 1100 years to the reign of Alfred the Great. In the 13th century, the Mint moved to the Tower of London, and it’s now based in Llantrisant, Wales.

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