What are contactless payments?

Holly Thomas / 13 February 2015 ( 11 May 2018 )

In 2016 spending on contactless cards in the UK rose to £904 billion. But how do contactless cards work, and will cash payments ever disappear?



Spending on contactless cards in 2016 rose to £25 billion, according to official figures from the UK Cards Association.

There were 2.9 billion contactless payments made in that year, with the average purchase rising to £9.52.

The increase in popularity prompted the UK Cards Association to increase the maximum amount for which you can pay for goods simply by waving your card over an electronic reader from £20 to £30.


How does it work?

Contactless cards, which were launched in 2008, allow customers to make payments without having to enter a PIN. You can only pay in this way if your card and the retailer has contactless capability.

If your card is contactless, it will have a small logo on it, which looks very similar to the Wi-Fi symbol. This same logo is also displayed on payment terminals that accept contactless payments.

When you come to pay, you need only to hold the debit or credit card within a few inches of a payment device, which reads the card and processes the transaction. It’s a lot quicker than using Chip and PIN.

Who uses it?

Using the cards for modest purchases is popular in coffee bars, newsagents and chemists, and in London, on the Tube and buses.

While it may have been introduced in London, contactless payments are now widely available through the UK. Retailers have embraced this technology because it speeds up customer handling and reduces queues. 

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Could cash disappear?

According to the UK Cards Association, in 2016 11.6 billion debit card payments were made, 22% of which were contactless. However they predict that by 2026, 18.2 billion debit card payments will be made per year, 51% of which will be contactless. 

However, no one is expecting cash to disappear anytime soon. This will be music to the ears of those who still favour cash. Contactless, or indeed card, payment is not liked by everyone and campaigners are urging companies to consider the wishes of their customers, who would like the choice of how they pay for goods and services.

Some companies have stopped accepting cash payments

Many businesses are phasing out cash payments to help cut their own costs. Car parks are among them, opting to convert payment machines to card only.

Paul Green, Saga's Director of Communications said: “Car parks should be designed around the users, not just for the convenience of those that run them. Whilst older age groups are the fastest growing users of technology, there are some who do not use mobile phones on a regular basis, and others who simply prefer using cash.

“Technology should be used to help liberate, not limit, individual choice. Both young and old should have the option to pay in a way that suits them.”

How safe and secure are contactless payments?

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.