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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).

john mccolgan says:
13 May 2012

I’ve yet to come into contact with a retailer that accepts contactless cards

Anthony Jordan says:
20 August 2013

What is the procedure for opting out of the contactless facility (or alternatively reducing my contactless upper limit to zero)?
I wish to have no contactless facility on my Nat West debit card nor my Barclaycard credit card.

I made a formal complaint to Barclaycard about it but they said it was company business policy to enforce it on all their cards and there was no opt-out procedure. A Barclaycard manager also admitted they had received many complaints about it but were doing nothing to resolve them.

One solution – but you may not like it – would be to close your credit card account at Barclaycard. You could have no credit cards at all (as many of us do) or, if you feel that you need or wish the retain the convenience of credit, you could switch to a different CC provider. Many don’t yet offer contact less and I’m sure that it would not take too much effort to find out which providers insist on you having CC and which have it as an option. Which? could help us a lot by getting a list of providers and their policies together.
It’s a greater hassle to switch banks for your Debit card, but if you get desperate you could consider this too. I’m with Nat West too and as yet they have not mentioned contactless to me at all, but if they do they will be told that I don’t want it and if they send it anyway I’ll be at a different bank faster than you can say contactless card.

Dave says:
13 May 2012

MacDonalds, Eat, The National Trust, Subway, YO! Sushi, Cafe Nero, Barnardos, Krispy Kreme, Boots, Pret, Crussh, Little Chef, Co-Op, Spar, Chopd & London 2012 Olympics retailers.

I don’t see why retailers need to impose a minimum purchase amount for payment by contactless card. The card networks impose much lower interchange fees on merchants for processing contactless payments. For example, according to http://www.visaeurope.com/en/about_us/our_business/fees_and_interchange.aspx, Visa charges 1p for contactless debit card payments up to £2, 4p for payments up to £10, and 8p for payments up to £15; for contactless credit cards, it’s a flat 0.65% fee. Even after the merchant’s acquiring bank adds its own markup to Visa’s interchange fees, there is still no incentive for merchants to impose a minimum purchase amount.

That’s funny – receiving a payment in cash does not cost anything!

Alex says:
23 May 2013

That just isn’t true. Cash needs to counted, stored, insured, and banked.

Why do you think retailers offer free cashback? They don’t want your cash.

Dave says:
28 January 2014

I may well be very out of date, but when Cashback first came in I used to have relatives who worked fro Gateway supermarkets. I was told then (late 1980’s) that the banks pressured the store into offering cash back. I don’t know if this is still the case or not.

Bob E says:
14 May 2012

If your card is kept in your wallet, in your back pocket, as is normal for most men. What is to stop some hacker from building a higher power scanner than the official readers, and just go around scamming from mens back pockets,

That problem could easily be avoided by using a card reader and perhaps a PIN could be used to improve security. That sounds a familiar idea.

Using a scanner won’t work as the cards use cryptographic techniques with their embedded microprocessors. They don’t just send out a number; it’s a different number each time, so if you do manage to get some data out of them with a scanner it will be of no use at a later time.

Sam Towers says:
23 June 2012

There are no active electronics in these cards. Microprocessors require power to perform any calculations. The NFC tags are unpowered, read-only radio-wave transmitters.

Think of them as those glow-in-the-dark stickers kids get, except instead of emitting visible light they emit frequencies of light in the part of the spectrum used for radio communications. After all, radio-waves are just a kind of light that we can’t see, like ultra-violet and infra-red.

Mark M says:
24 November 2012

Thinking “hackers” could scan your back pocket is rather naive. The whole point of NFC is that you need to be close. Really close. If someone could get close enough to scan your card in your pocket, you may as well nick the wallet!

What irritates me about the whole contactless payment system is the lack of awareness that surrounds it. It seems vendors have little idea what they are being charged by banks and therefore pass on excessive “fees” to customers. I constantly see minimum payment levels set, or “processing fees” charged for card use. I’ve begun to boycott stores that want to charge me for using my contactless card or setting a minimum purchase for those transactions. I thought the whole point of contactless payment systems was to reduce the cost and burden of businesses handling lots of small denomination cash.

More education and awareness is needed to get the system working properly.

I don’t keep my wallet in my back pocket in case it is stolen.

Exactly. Anyone keeping their wallet in their back pocket is asking for trouble. There is a greater risk of theft, whether physically or electronically.

I’ve heard that there are devices that can read proximity cards at a slightly greater distance but no one has ever demonstrated this outside a controlled environment in a real life situation as far as I am aware. Also of course you need the decryption code to open the chip to access the encrypted parts of the information contained thereon.

oxchris says:
14 May 2012

I remember the same hysteria when ‘Chip and Pin’ was introduced. I love my contactless card and have not met any minimum payment requirements when using it. I don’t understand why a shop would prefer the cost and risk associated with securing cash over an instant payment that costs pennies and increases sales. I suppose some people are just old-fashioned.

I agree but try using your card to buy a sausage roll in Greggs.

I am not sure what you see as hysteria, oxchris. We may all come to love contactless cards but I am waiting to find out if there are security issues before considering using one.

Another reason for waiting is to find out where a contactless card can be used. I already carry credit and debit cards, cash, a store card and occasionally a cheque book. I would only be interested in a contactless card if it was widely accepted.

Mark says:
14 May 2012

There’s always a healthy and natural suspician of new technology and it can take a while for the majority to be convinced.

I find my biggest barrier to using it is the staff at many of the stores not being trained up. I went into Co-op and the lady behind the counter looked at me with suspician and jaw-dropping awe when her till opened without me even inserting the card in the card reader. I repeatedly told her I had already paid, but she wouldn’t believe me until the receipt started printing out.

I’m not happy with the extra money Visa and Mastercard a pocketing for the higher transaction costs they charge to retailers, and have considered typing in my PIN so retailers get a few more pence of my money. The technology will only really hit it off when it becomes ubiquitous, and it will never do that while Visa/Mastercard charge shop keepers such a large premium.

I think some wallets with “safe pockets” for Contactless cards would help allay early adopter’s fears.

The card networks impose much lower interchange fees on merchants for processing contactless payments.

Dave says:
15 May 2012

I’m not convinced by the arguments for “safe pockets” or covering the card in tinfoil etc. Would put me off using the card if it required special facilities to carry it around.

I’m a bit torn on contactless cards – I completely see why people are worried about using them, but as someone who really hates carrying cash, I am delighted that such a simple thing can save time.

I actually used my contactless card for the first time the other week, when I was in the pub. The bartender put through the drinks and when I handed him my card he seemed to just hand it straight back to me. I thought he was generously giving them to me on the house, but then he pointed out that the payment had been swiped. Nice touch, as it helped minimise queues at the bar (imagine an endless series of tipsy people trying to key in their pin numbers without anyone looking over their shoulder), but I imagine it was a bit of a job for him to persuade people that it was a good idea – initially it feels very odd because it’s so different to the usual chip/pin routine.

Rich says:
10 June 2012

You may want to read this from ITV on This Morning.


Card scamming with Thomas Cannon

Contactless cards are available to Natwest, Barclays, HSBC, RBS and Lloyds customers. Just by touching their card on the reader at various high street stores, they are able to pay for goods which are under £10, without using chip and pin or signing for purchases.

Instead of storing data on a magnetic strip, the contactless payment card stores data on a microchip embedded in the card’s plastic, which is fitted with a radio antenna capable of transmitting the data to a card reader without physical contact.

They are currently used by around 20 million people, they have been introduced to be quicker and more convenient than cash or traditional card payments.

However, fraudsters can purchase these handheld receptors for as little as £7 on sites like eBay, and simply by walking past cardholders can access their bank details.

Thomas’s top tips

Check your bankcard statement every month for fraudulent transactions
Use a shield – either put tin foil round your cards or purchase a wallet with a shielding sleeve
Credit card sleeves, £2.50 and Leather credit card holders, £7.99 from rfidprotect.co.uk

Zed says:
14 June 2012

I think its a fantastic idea,

however there IS a security issue

What is to stop your dosey mate, or sneaky children, taking your card.
Once they have taken your card, they can buy whatever they like and then just putting the card back in your wallet.
You will only realise once your statement comes through.

I only really see it taking off on mobile devices with a app, because (or so I have heard) when you swipe the device, the device asks for a password which you would enter on your phone.

I dont even see baclaycards paytag taking off.

Am I wrong. I hope I am wrong. But for now I am not wanting a paytag or a contactless card.

I will wait untill my upgrade to a NFC phone.

Dave says:
14 June 2012

The PIN will be required at random/after a certain number of transactions to minimise the risk. Having to use a PIN for every transaction wouldn’t exactly promote the contactless cards use to replace cash.

David Coleman says:
12 July 2012


I have just been ripped off with this new system and i didn’t even know it was on my card.
Ordered 2 drinks at a local pub charged at £5.50 and the barmaid asked if i wanted a receipt – i said no because i ALWAYS check the cash before entering my PIN.

She then just swiped my card – I didn’t even know that was possible!!!
I found it very strange and it confused me and i obviously was worried as it seems so insecure.

Just checked my statement and she has taken £15 from my account instead of the £5.50 the drinks cost!

I am really annoyed as this is theft and the banks should know better to introduce such a simple system to steal money from people’s accounts!

I have a witness but she will probably just say i ordered more drinks but i will be phone fraud department of my bank first thing tomorrow morning!


I wonder how many other people have been stolen from without even knowing!

Emmy says:
18 July 2012

I have recently received contactless debit cards from HSBC and RBS. I did not ask for either and I do not want them. I have a number of bank accounts – if I recieve contactless cards for all I fear that my exposure to finincial loss doubles or trebles, should I lose my purse or have it stolen. I would rather stick to cash or chip and pin, until these cards have been tried and tested for a few years. I have read the security concerns about crooks being able to scan these cards through my purse and I also hate the idea of carrying around cards that are transmitting digital signals all the time. What are the health implications?
I asked my local HSBC branch if I could replace my card with a none-contactless debit card. I was told this was not possible. Short of closing my account I don’t know what to do. I feel very angry that this card has been imposed on me. My husband feels the same. RBS were much more helpful and have agreed to send me a card without the contactless facility.

Hi Emmy, don’t worry about the health implications as the cards don’t have a battery and therefore cannot transmit continnuously. They only do so when they are very close to a reader, which powers them up electromagnetically. But I do share your concerns about the security risk. Hopefully, if your cards are stolen, because of the low limits the thief will only be able to take out a few tenners before he’s stopped, and if you weren’t negligent when the cards were stolen and you reported it as soon as you discovered the theft, the bank should reimburse you. All in theory, of course.

After my first day of using my newly issued card I do not want one. I did not want one in the first place but it was sent when my old debit card expired. It has been declined every time I have tried to use it although the Co-operative Bank tells me it is fine and they also say they cannot issue non-contactless cards.
Over the next year or so I expect massive theft of small amounts of money using contactless cards to create a scandal to match PPI mis-selling and the administrative work involved in dealing with small thefts will cost the banks millions and millions.
I’ll probably stop using my debit card. Thank goodness cheques still exist but at some point I expect the bank card companies to announce that the contactless debit cards are such a success that they are making credit cards contactless up to the cardholder’s credit limit.
Who wants to campaign for the right to have a non-contactless card?

The Co-Operative Bank says:-

Contactless offers you a new way to pay although you will continue to have the option to pay using your PIN.

Contactless offers you the choice of a quick and convenient way to pay for goods up to the value of £20, however you can continue to make payments by cash or Chip & PIN should you wish.

So just don’t use the contactless facility. No one anywhere has yet demonstrated a theft via a contactless card outside a laboratory or without having to use so much equipment as to be a bit suspicious so close to the card holder.

Milbern – count me in!