Slow start for payment cards

Large retailers cautious over contactless cards but banks predict rapid take-up during 2008

Barclaycard will launch a contactless card combined with Oyster

One of the UK’s largest banks says the initial rollout of contactless payment cards may fail to attract the predicted number of retailers ahead of its launch this year – but the plan is expected to take off in 2008.

From September, Londoners will be able to pay for low-value items by waving their debit or credit card over a reader at selected shops in Canary Wharf.

The rollout, which follows agreement on a national standard by the banks, aims to attract 2,000 retailers.

But the project is unlikely to attract that many firms in time for the launch, says the Royal Bank of Scotland’s (RBS) head of business development David Rockliffe.

‘I do not think we will have 2,000 retailers signed up by September, though we may reach that number by the end of the year,’ he said.

‘But I can still see the number of merchants offering contactless payments reaching 100,000 by the end of 2008.’

RBS is providing upgraded tills that accept contactless payment free to small retailers that use bank-owned terminals. But larger shops must integrate the new technology with existing terminals and many will not take part in the September launch.

‘It is a more complex task, so many big retailers may wait until the end of the year or early next year to do it,’ said Rockliffe.

Barclaycard, which is developing an integrated card that combines credit, debit and Oyster travel card, is confident that it will attract enough retailers.

‘We are on track to meet the predicted target and we have been talking to some big name retailers,’ said a spokeswoman.

‘An announcement should be made in the next few weeks on which high street names have signed up.’

A spokesman for the British Retail Consortium (BRC) says there has been a mixed reaction from retailers so far.

‘We do not know how widespread take-up will be because there has been a mixed response to the scheme,’ he said.

‘There will be benefits, such as speed of payment and queue reduction, but some retailers are concerned about the potential cost of each transaction.’