Wave and pay cards wave goodbye to cash

A new scheme will allow Britons to make payments of less than £10 with the swipe of a card.

The “wave and pay” cards which are being led by Visa and Mastercard will be launched in seven London areas in September, before being rolled out to the rest of the UK.

They will allow people to pay for items by passing a special chip card in front of an electronic reader installed in a range of retail shops, restaurants and vending machines in a “safe and secure way”.

Oliver Steeley, head of strategy at Mastercard, said: “We need to get the balance of speed and security just right, but the wave-and-pay cards are safe.”

This, Steeley said, was because the technology would be integrated into customers' existing Chip and PIN credit or debit card meaning the PIN facility would still be available.

“This gives the issuing bank the opportunity to prompt for a PIN if they feel it is necessary,” he told Computeractive.

“For example a PIN will probably not be requested if a customer bought a travel card in the morning with Chip and PIN and then used the contactless method to buy a sandwich as it would be pretty safe to assume the card was still with its rightful owner.

“However, if the card has not been used for a few days then a PIN would be requested to verify the user,” he added.

Sandra Quinn spokeswoman for UK payments agency APAC’s also agreed that the security risks would be “minimal”.

“The technology in these cards is extremely sophisticated so as well as having a limit of £10 a transaction, the cards will also prompt people for a PIN after a certain amount of spending times,” she told Computeractive.

The number of times, she said, was “yet to be confirmed, but would be around the six or seven".

Quinn also said these cards were unlikely to appeal to fraudsters as these people often look to see what they can sell on for a high price, and would not make much profit from a £10 item.

“We predict that most of the transactions carried out with this method will be done with a debit rather than credit card considering the low amount that can be spent in the transaction. Therefore under the banking code people will be entitled to fraud protection and refunds if the card is stolen,” she said.

The wave-and-pay scheme, which will initially be available to those living in EC2, EC3, EC4, E1, E14, SE1, SE16, follows plans last month by Barclays who teamed up with taxi firm Cabcom to give travellers a cashless way to pay for fares up to £10.

Bank of Scotland, Citi, Halifax, HSBC, Lloyds TSB and The Royal Bank of Scotland Group have also announced plans to provide up to five million people nationwide with the cards the by the end of 2008.