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Are small payments a big problem for contactless cards?

NatWest debit card with contactless symbol

Contactless cards have yet to take off in a big way. But is that because people are reluctant to use the technology? Or is it due to retailers setting arbitrary ‘minimum payment’ limits that clearly defeat the point?

My bank, NatWest, emailed me this week to tell me it was sending out a new debit card capable of making contactless payments. Thanks very much – but I was happy enough with the old card. I suppose it may come in handy on occasions, but I’m still mainly a ‘cash man’ for small purchases.

This comes following the news that HSBC is issuing contactless debit cards to its customers, so that they can pay for goods with just one ‘tap’ at the Olympic Games. HSBC has also said that customers who don’t want this type of card can opt out by contacting their local HSBC branch.

A problem with minimum payments

One potential problem with contactless cards that recently came to my attention is minimum payments. A Which? Conversation reader emailed us to say that they’d tried to use their contactless Visa card at the branch of a popular high-street bakery, but was told that there was a £2 minimum spend.

He was then told at another branch of the same bakery that there was a minimum spend of £3. When he contacted their head office, it told him that company policy was to enforce a £3 minimum spend.

Our persistent reader then contacted Visa and was told that ‘Visa merchants are not permitted to establish minimum transaction amounts, even on sale items’. It seems that shops are setting their own minimum amounts, which could be putting people off from using contactless cards.

Overall, minimum payment policies appear to defeat the main appeal of contactless cards – not having to carry around pockets full of coins.

Contactless cards don’t catch on

This reader’s story comes on the back of research from Mintel showing that people are fairly reluctant to use their contactless cards and many are unsure whether they even have them or not. The research highlighted that only 25% of contactless card holders ever using them to make payments.

So why do you think people are reluctant to use their contactless cards? Have you had your contactless payment turned down because the total amount was too low?

Dave D says:
13 May 2012

Given the whole furore over the payment fees issue, in which Which? seems to have had success but there is a possibility that this will turn out to be an own goal, I think it is hardly surprising that shops are setting minimum spend limits, and quite frankly I sympathise with them. The banks are doubtless charging the retailers for processing the fees (I have no idea whether they are charging as extortionately as they do for ‘normal’ card transactions), the retailers still have to pay the ‘phone line rental, ‘phone call charges and electricity bills for running the terminals – the retailers are therefore incurring much teh same costs as they do for ‘normal’ card transactions and, irrespective of whether card “processing fees” are or have been unrealistically high, the retailers are still having to pay *something* and will recoup this either through fees, minimum spend thresholds or simply raising prices for everyone. It is my view that this is just another money-making scandal by the banks.

Personally I am far more worried about the security side of things and want to know if it is my legal right to refuse such a card, just as it is my legal right to refuse a PIN card, I shall certainly tell Nat West that I don’t want it if they send one to me and if I cannot find proof that I legally have the right to refuse it I will simply destroy it, send the pieces back to Nat West and refuse to use a debit card at all; I can manage perfectly well with cash and cheques and my Credit Card, which I pay off in full each month.

Could Which? please find out if we have the legal right to refuse these and let us all know?

oxchris says:
14 May 2012

You do not have to have or use any plastic cards if you don’t want to. Just cut it up.

Luke says:
28 January 2014

FYI – Banks don’t charge businesses for processing their card payments, however there’s a 1% Visa charge for all transactions made by a business which most shops long ago compensated in their pricing to ensure they didnt loose out.

The minimum spend on cards was to stop lengthy transactions for small amounts which would increase the queue sizes and put other customers off whilst encouraging greater spend. It’s a good idea, but as contactless is now quicker than chip & Pin, which in turn is quicker than the mag stripe method, I can imagine these minumum spends will start to fade away.

Dave says:
28 January 2014

Thanks for the latest info Luke – is this a recent change then? Certainly up to last December I was able to verify, via a friend who works for them, that the banks were still charging a large department store chain, which advertises itself as “Britain’s favourite department store”, a substantial percentage fee against every debit card transaction, on top of all the other on-costs (telephone line, electricity, etc) incurred by having the payment terminals.

It would be a wonderful change to find that the banks have stopped making these charges, but if they have I’m amazed that it hasn’t been national headline news.


If there is no PIN to be entered, how can we be sure that there are no phantom withdrawals? I would like to be sure that the consumer is protected. I am slightly suspicious and would like to see how others get on.

Perhaps contactless cards have no greater risk than a waiter disappearing with your credit/debit card in a restaurant or your card being swiped on arrival at a hotel for an amount be determined at the end of your stay, but these procedures should be outlawed.


I had intended to say that I see security concerns as a much bigger issue than minimum payment limits for contactless cards.

Dave says:
13 May 2012


How does contactless actually work?

Contactless works by using short range wireless technology, so the reader will pick up a signal from your Visa card when it’s very close to it. You can use your card for payments of £15 or less and, as an extra security measure, your bank will set a limit to the number of contactless transactions you can make before you use your PIN.

How secure is my contactless card?

It is very secure. Visa contactless cards use the same secure technology as any other Visa chip and PIN cards. Also, because the card never leaves your hand, there’s actually less chance of fraud.

For payment to be taken, a retailer must enter the amount for you to approve and you then need to place your contactless card very close to the reader. Therefore, contactless payments cannot be made or duplicated without your knowledge.

Dave says:
13 May 2012


Customers who do not want a Contactless card can opt-out, and card issuers will take into consideration the varying needs of different customer groups (youth market, elderly or disabled customers for example).