Barclays rolls out contactless payment for debit cards

Barclaycard has already issued over a million contactless cards

All Barclays customers are to start receiving Visa debit cards with contactless technology built in to allow purchases worth less than £10.

With the "touch and go" technology, consumers can hold the card up to a reader to buy goods without the need to enter their PIN code.

According to the bank, contactless will be "a standard feature of most new and replacement debit cards".

The bank is the first in the UK to rollout the new technology. Bank of Scotland, Halifax, HSBC, Lloyds TSB, NatWest and RBS are all working on their own contactless offerings.

Up to three million customers will receive the new cards by the end of this year and the bank expects the majority of clients will have received them by 2011.

Following the partnership with Transport for London to launch a combined Oyster and credit card in September 2007, Barclaycard is already issuing cards with the technology built in, and more than 1.5 million Barclaycard cards in circulation are contactless-enabled.

Approximately 8,000 retailers have rolled out contactless terminals, including branches of Pret A Manger, Coffee Republic, Books etc and Threshers.

Thousands of independent shops are also using the technology, but cost of ownership is a pressing issue faced by the contactless industry. Last year, trade body the British Retail Consortium said the new system is a ploy from banks to boost revenue.

Banks recognise they need to be upfront about the direct costs of the new cards, but are aware that businesses recognise the need to speed up transactions.

London’s Olympic Games are a reference point for the development of contactless cards, with issuers such as Lloyds TSB working on a number of initiatives that could allow eventgoers to pay for everything from taxi bills and stadium access, to purchasing food and drinks inside the venues.

But removing the need to enter PIN codes when using the cards raises security concerns around liability for purchases made if the card is lost or stolen – in such situations, consumers are responsible for any losses incurred up to £50.

Security vulnerabilities remain a grey area in the evolution of contactless technology, but banks maintain that risks will be mitigated by switching to the PIN verification every few transactions.