A messy move to contactless payments

I’ve discovered that in a few weeks’ time I won’t be able to pay a bus fare in London without an Oyster card. Transport for London announced earlier in the year that from June it won’t accept cash on the buses, although if your prepaid Oyster card runs out you have the option of paying with a contactless debit or credit card.

Last week I got around to contacting my current account holder, the Nationwide, to ask when it’s going to make swipe cards available. The guy from the contact centre was helpful, but said the building society didn’t know for sure when it would launch the cards, maybe some time next year. It’s aware of TfL’s plans, but swipe cards aren’t high enough up its agenda to prompt any urgent action.

It’s not a massive inconvenience, but it prompted thoughts about whether a move away from cash for smaller payments will be a smooth process.

It will happen. People are already making a lot of smaller payments with chip and PIN cards, and making it possible with a swipe rather than punching in numbers will make it easier for the consumer, and the people in the queue behind. But when? And will it happen without a lot of teeth grinding and complaints?

The UK Cards Association, the country’s leading flag waver for cashless payments, points to a bunch of major retail chains on board and lists seven banks that have issued the cards; but it also acknowledges that a number of big names have no immediate plans to do so.

It’s not urgent for them because there’s no immediate incentive. It can make life a little more convenient for their customers, but the ‘little’ is crucial; a minute punching a PIN number into a card reader once or twice a day won’t be enough to make them want to change their bank or building society.

Retailers are not going to force the issue by refusing to accept cash as they don’t want to turn away customers. Remember that there is a minority, largely older people, who still pay cash for everything. TfL can make it mandatory because it has a monopoly of London’s public buses, but even in this case it has made a concession of one extra journey for people not having enough money on their Oyster cards.

As for leapfrogging swipe cards to payment by mobile phone, it hasn’t really gathered momentum in the UK and there’s a factor working against making it a priority – millions of people who have got used to cards but don’t own smartphones.

There will eventually be a tipping point when so many people are paying by contactless cards that it becomes expected, and all current account providers will have to respond. But this is going to come gradually, by increments, and there’s going to be an awkward period, probably of a year or two, when some people pay with a swipe, and stand in queues grumbling about those who want to but cannot.

Mark Say is a UK based writer who covers the role of information management and technology in business. See www.marksay.co.uk