Wednesday 12 December 2012

Contactless payments: are we really ready for cash-free shopping?

Contactless card payments are seen as the future of small-item shopping, but not all stores are prepared for its arrival
Guardian Money reporter Jill Papworth tries out contactless payment in a Boots store in London, UK
Guardian Money's Jill Papworth attempts a contactless card payment in a branch of Boots. Photograph: Frank Baron/Guardian
This was supposed to be the year we would see a revolution in the way we spend our money. The idea was that we stop using notes and coins for items such as coffees and newspapers, and simply wave our plastic cards over a reader at the till. But although millions of people have been issued with debit and credit cards displaying the contactless "wave" symbol, early evidence suggests shoppers aren't giving up on cash just yet – and many retailers themselves still need convincing.
In a mystery shopping exercise carried out this week, Guardian Money found that Boots, Marks & Spencer and Tesco have embraced the new form of payment. But other chains such as Starbucks, Costa Coffee and the Body Shop rejected our attempts to make a contactless payment – and some shop assistants barely knew what they were.
Contactless is for payments of £20 or less, and means you don't have to key in your pin. The advantages for consumers are that they are in and out of a shop quicker, with fewer queues and no fiddling around with change; retailers (are meant to) like it because they don't have to handle large amounts of coins, and they also hope you will spend more money.
But many shoppers worry about what will happen if their card is stolen and the thief runs up a big bill. That said, others like the idea of being able to pay without worrying about someone else behind them seeing them tap in their pin.
In the banking industry a war of words has broken out over whether the public have taken to contactless payments. ATM operator Bank Machine recently published a survey that said 51% of Britons have no idea whether or not any of their bank cards are enabled for contactless transactions, and also highlighted concerns about fraud. A few days later, Barclaycard issued research showing that 84% of the public now recognise the contactless symbol, with six in 10 people saying they prefer cards to cash for purchases up to £20.
It also emerged that across Barclaycard and Barclays, which between them have issued more than 19m new-style credit and debit cards, the number of contactless payments is now running at more than 1m a month. But some might say that is a drop in the ocean: according to the UK Cards Association, each month in Britain there are more than 800m debit and credit card transactions. The association says on its contactless.info website: "The number of contactless transactions is relatively low as we are still in the early stages of roll-out."
And while London 2012 was highlighted as a "cashless Olympics", with retailers at the sites able to accept contactless payments, Visa said last month (before the Paralympics began) that only 150,000 payments at Games venues were made using the technology. This represented 15% of all card payments of £20 and under.
On the other hand, many big-name retailers and banks are embracing the technology, at least to some degree. Last month Marks & Spencer became the latest retailer to introduce the payments - initially in its 25 busiest London stores and a number of Simply Food outlets. But it is the supermarket chains that are needed to bring the phenomenon into the mainstream.
Tesco is trialling contactless payments in only about 30 of its stores, Asda is testing it in 25 London outlets, and Waitrose has the payments system available in 10 stores, with plans to introduce it to the rest of its branches by spring 2013. The Co-op began a trial in stores within the M25 and Manchester city centre in May.
Meanwhile, by the end of 2012 London buses will accept contactless payments, followed by the tube and the rest of the capital's transport network sometime in 2013.
Some would say things have not been helped by the varying approaches taken by the banks. While Barclays/Barclaycard has been the undisputed leader in this field, HSBC started to introduce the technology in May this year, but doesn't expect its roll-out to be completed until mid-2015. And if you are a customer of Nationwide you may have a long wait, as it has no plans to issue contactless cards.
Amid anecdotal evidence that relatively few people who have one of the new-style cards has used them to make a contactless payment, Guardian Money took its card, plus a shopping list for office colleagues, on a tour of the retail outlets in and around London's King's Cross and St Pancras stations. These shops are geared to serving travellers on the move, and local workers keen on quick lunch-hour shopping. In each store we took a low-cost item to the counter and handed over the card to the sales assistant. The results, as can be seen below, are a mixed bag.

Pret A Manger, bag of nuts, 99p: YES

The assistant offered me a choice between a touchscreen contactless terminal or a chip-and-pin terminal. One quick touch of my card on the former and I was done. The assistant said about one in 10 customers paying with a card were opting for contactless. "It's quick and easy for me and works well," he said.

Tesco Metro, fruit salad, £2: YES

The screen on the card terminal at the checkout gave me the option to make a contactless payment – again, simple and fast.

Costcut Express, chocolate bar, 65p: NO

The assistant said: "You have to pay a 50p fee if you want to pay for it by card instead of cash."
"Don't you do contactless payments?" I asked. "No, we don't," came back the reply.

Starbucks, carrot cake, £2.10: NO

The assistant tried to show me how to put my card into the chip-and-pin terminal. When I asked if I could make a contactless payment, she said: "Sorry, we don't do that."

McDonald's, Big Mac, £2.69: YES

The assistant pointed out the card terminal. "Do you do contactless payment?" I asked.
"Yes, there," she said, pointing at the screen which showed the contactless symbol. I touched my card to it – done.

WH Smith, crisps, 99p: YES

The assistant told me to put my card in the terminal. "Don't you do contactless?" I asked.
"Oh yes," she said, before fiddling with something behind the counter to make the terminal accept a contactless payment.
"Quite a few people use this payment method, but it is not automatic on the machine," she said. The same applied when I wanted a receipt. She said they were only automatic if you paid by chip-and-pin, but she was able to prompt the machine to produce one at my request.

Accessorize, umbrella, £10: NO

When prompted to put my card into the chip-and-pin machine, I asked: "Don't you do contactless payments?"
"What?" said the assistant.
Once I explained what I meant, she said: "What, no pin or anything? Yes, I think I've seen that advertised. It sounds good but I'm afraid we don't do it. Sorry."

M&S Simply Food, salad, £2.75: YES

There was a big sign next to the terminal saying: "Why not pay contactless today?" So I did.

Costa Coffee, mini chocolate cookies, 99p: NO

When I asked if I could make a contactless payment, I was told: "No, sorry, we haven't got it yet – maybe next year. I know other retailers are doing it. "When I asked if many people requested it, I was told: "Not really. You are only the second person who has asked me for it, and I've been here for a year."

Boots, face wash, £2.99: YES

There were signs at the till telling shoppers they could make contactless payments for items up to £20, and the sales assistant started explaining it and automatically did it for me the minute I gave him my card. He said since getting the terminals installed the assistants have told everyone with a contactless card about it.
But when I tried a different, larger Boots to buy an item I had forgotten there were no signs and the assistant started to put my card into the chip-and-pin machine before I mentioned contactless. "Sorry," she said. "I didn't notice you had a contactless card," before processing it immediately.

The Body Shop, eyeshadow, £8: NO

The sales assistant said she had never heard of contactless payments and had never been asked about it before.

Paperchase, writing book, £4: NO

"We don't do contactless payments, I'm afraid."

Foyles, greetings card, £1.99: NO

When I asked if their card terminal would accept contactless payment, the assistants laughed and apologised. "It took us 20 years to get these," one said, pointing at the chip-and-pin terminal. "It'll take us another 20 years to get new ones!"
• This article was amended on 17 September 2012. It originally said only 15% of Visa customers who could have opted to use contactless payments did so at Olympic venues. It should have said that 15% of all card payments under £20 were made contactlessly.

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