What is contactless?

Simply, it is a faster way of reading card details from the CHIP on the card, allowing the chip (on upgraded cards) to be read from a short distance by a card reader without the need to insert the card into a contact device. These details will be read in under a second.

The payment, which will be authorised offline by the terminal and the card reader, will not require the cardholder to sign, or enter their PIN to complete the transaction.  This speeds up the transaction process and based on experience in the United States, average transaction times can be reduced by up to 40%.  For security purposes, cardholders will occasionally have to undertake a contact transaction and enter their PIN if they have completed several contactless transactions since they last used their PIN. Contactless transactions are more convenient for cardholders as purchases are not restricted by the amount of cash they are carrying. Experience in the United States has shown that the average transaction value could be increased by up to 40%.

Contactless card payments will be acceptable for payments up to and including £10; amounts in excess of this will have to be processed in the usual way, verified by either PIN or signature. 

Provided they meet one or two simple obligations, the merchant is guaranteed payment as the fraud and credit risks attached to contactless payments rest entirely with the card issuer.

What is the London launch?

The card schemes, and their members, agreed that the UK launch of contactless card payments would take place in an area between the City of London and Canary Wharf. The initial launch period of activity will last for approximately six months, after which time the technology will be rolled out across the country. 

What happens beyond the London launch?