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Contactless payments - plastic fantastic?

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Older consumers are some of the most enthusiastic users of contactless payment cards, but should you be worried about their safety? Annie Shaw investigates 

Contactless payments are popular - but are they safe?Tap-and-go cards are taking over the way we pay – and older consumers are among those most enthusiastically embracing the technology.

According to research by retirement specialists Saga, by the end of 2015 one in five over-50s were using contactless payment up to three times a week to buy groceries, food and drink in restaurants or cafes and coffee and cake in coffee shops.

As well as enjoying faster-moving queues on public transport or at the supermarket checkout, the over-50s particularly like not having to remember their PIN, with one in three liking not having to carry cash.

The organisation Payments UK, which keeps tabs on the way that people prefer to pay for goods, predicts that by 2021 payment by card will overtake cash for the first time, and a growing number of these will be contactless transactions.

But what if you don’t like the idea of contactless payments? 

But a survey of over 2,000 adults by Future Thinking, a consultancy, found as of Spring 2016 that 43% of over 55s said they never used contactless cards as they didn’t trust the technology, with a further 13% not even sure if they had contactless cards. 

Regardless, the technology looks like its here to stay and while some banks will issue you with a non-contactless card if you ask for one, many will not. 

This may or may not be a bad thing, as retailers are increasingly going cashless. Many transport systems, including Transport for London buses, no longer take cash for fares. 

Meanwhile, in early 2016 fast food outlet Tossed opened two new stores that accept only contactless payments and said it planned to extend contactless-only to all 26 of its stores in the future.

Fear of fraud

But what about fraud? Surely, if someone steals your card and doesn’t need to enter a PIN, you could lose a lot of money? 

The risk is actually quite low, as unlike cash which can be stolen, there a limit to how much can be taken via a card, while contactless cards also have a reimbursement guarantee where fraud has taken place. 

If you are victim of card fraud, you will get your money back from your bank and so won’t be left out of pocket. 

The UK Cards Association, which represents the card payment industry, also says that contactless cards have an in-built security check that requires you to enter a PIN after a number of consecutive contactless payments, to verify you as the genuine cardholder.

The number of transactions you can make before you need to enter a PIN varies between card issuers and if the PIN is not entered correctly when demanded, the card will be blocked.

Consumer group Which? did experiments in summer 2015  and reckons a thief would be able to spend between £45 and £100 before being asked to enter a PIN.

Do I need a special wallet?

Unless you’re super nervous, you probably don’t need to invest in a special signal-blocking wallet to protect your cards from money or details being skimmed from them while they are in your pocket or bag. 

Despite this, they appear to be popular – a quick search for signal-locking wallets on a major online retailer brought up well over 5,000 results. 

That said, contactless cards are not entirely risk free. The experiment by Which? showed it was possible to obtain card number and expiry dates with a scanning device, although not the ‘CVV’ security number on the back. 

Despite this, Which? was able to use these stolen card details, combined with a false name and address, to order items online – including a £3,000 TV. 

Party tricks that show someone passing a card reader over pockets and handbags and taking small amounts of money from each victim fail to show how the thief collects the stolen money. 

They would need access to a retailer account with an authorising bank – even assuming they could set up a retail account, it would make a thief highly traceable.

Money in your pocket… and on your wrist?

Just as you might be getting used to the idea of contactless cards, the future of payments looks set to be mobile.  

In June 2016, Google launched its AndroidPay service for Android smartphones in the UK. It comes a year after Apple launched ApplePay was for iPhones. Both work by linking your phone to your bank account, effectively turning your phone into a contactless payment card. 

Payment chips are also increasingly finding their way into devices like the Apple Watch and fitness-tracking gadgets like the Fitbit bracelet.

Barclaycard has introduced the bPay – a contactless payment chip that contained in a rubber bracelet, keyfob or sticker that you can top up with money from a linked bank account. The band can be linked to any UK account – you don’t have to bank with Barclays.

Other banks and tech companies are experimenting with putting payment chips into everything from gloves to clothes – even rings and jewellery. 

Some tips to help keep your contactless card safe

  • Treat your cards with the same care as you would cash 
  • Cancel cards that you don’t use, as you are less likely to notice if a card goes missing if you don’t use it often
  • Keep your PIN safe. Commit it to memory and never write it down where someone else could find it
  • Avoid ‘card clash’ - keep contactless cards apart to avoid paying with the wrong one if you prefer not to remove them from your wallet to do a transaction.

This article has been commissioned by retiresavvy and any opinions voiced are the author's own.

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I have only used Contactless once and the same day and two following days 7 fraudulent transactions each of £5,000 hit my account - nothing to do with "contactless" I was told - just coincidence!!

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