[IMGCAP(1)]

Nine months after the much-touted launch of contactless banking cards in the United Kingdom, the new way to pay is not exactly taking the country by storm. British banks had issued only 340,000 contactless banking cards as of the end of May. Contactless payment began in London the previous September. Consumers used the cards only about 15,000 times during April, by which time merchants had deployed 6,200 contactless point-of-sale terminals, according to British payments association APACS. The association, based on industry expectations, originally predicted 5 million contactless cards would be cin circulation in the UK by the end of 2008 and that 100,000 merchant locations would acceptthem.. "There's no denying, [the totals] are modest," Paul Rodford, head of card payments at APACS, tells CardLine Global sister publication Cards&Payments. One problem has been that no large UK retailer has agreed to set up contactless terminals throughout its chain. The industry also should do a better job of telling consumers where they can use contactless banking cards, Rodford says. Big retailers are holding back because of doubts about the business case for contactless, including paying merchant fees for the card transactions, sources say. That is happening despite a decision by Visa Europe to lower interchange for low-value transactions in advance of the launch. A source from Barclaycard, the issuing arm of Barclays PLC, confirmed this week to Cards&Payments the issuer was on track to roll out 1 million contactless payment cards by the end of the year. Not all would include London's popular Oyster transit purse, however. Barclaycard, along with Visa, led the London launch last September with the introduction of OnePulse, which combines contactless credit and conventional chip-and-PIN applications with Oyster. Other major backers of contactless in the UK are MasterCard Worldwide and the Royal Bank of Scotland. Cards&Payments has learned RBS had issued roughly half of the 340,000 contactless cards issued as of May. APAC's Rodford, who spoke at this week's Contactless Cards and Payments conference in London, says at least six large chains in the UK are considering  contactless. And survey findings suggest consumers remain positive about the technology. Rodford predicts banks will accelerate their rollouts during the second half of the year.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry