1. Economics
June 14, 2016

The rise of contactless payments: Or, how Brexit could make it more expensive to go to the loo on holiday

By Rachel Holdsworth

We’ve all been there: bursting for the toilet and fumbling for coins to get through the barrier and the sweet, sweet relief of the public lav.

Except on this occasion, there is no barrier and you’re staring at a contactless debit card swipe lock on the stall. Because you’re in Norway – and apparently Norwegians no longer believe in cash.

Norway has embraced card payment in a big way. On a recent trip to Bergen and Trondheim I wound up feeling awkward every time I took notes rather than plastic out of my purse (of course I apologised; I was raised in Britain).

On average, each Norwegian pays for something with a card more than once a day; they also use cashpoints far less than UK residents. (This may explain why I struggled to find an ATM, but that’s a different story.)

The Norwegians seemed to find my insistence on paying in cash quaint. Once, I tried to explain foreign transaction card fees to a barman and he looked at me like I was quite mad, so I never did it again.

But charges matter. All UK banks have slightly different policies on how much they charge when you pay with a card overseas. Some charge nothing. Some charge up to 3 per cent of the transaction value. Some charge a percentage and a fixed charge every time: this can be up to £1.50 every time you use your card.

Other cards have a minimum spend. None of these are things I want to calculate when I’m crossing my legs and desperate for a pee.

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I’ve written about payment systems in this space before. Japan seems to have got it right: its equivalents of the Oyster card not only integrate with transport systems in other parts of the country but, like contactless, can used for small payments without fees. They’re simple and don’t require head scratching mental arithmetic every time you want to buy a sandwich.

But in most of the developed world, cash is increasingly looking like yesterday’s payment system: you can’t even use it on London buses any more. Some 50 per cent of cards in the UK are now contactless, with 86.5m in circulation, and we use them in 180 million transactions every month – a figure that’s only going to increase. (And no wonder, when it’s so quick to pay for small purchases.)

The other half

Those of you who are maths whizzes will have calculated that if 50 per cent of British cards are contactless, then 50 per cent aren’t. Furthermore, a recent survey by a fraud protection company found that 19 per cent of UK adults don’t think contactless cards are secure and don’t want to use them at all.

That could be bad news for companies making swipe locks for loos – or left luggage lockers, or vending machines, or Transport for London, or any of the other myriad technologies that are relying on us tapping merrily away.

Then again, it could be bad news for the customers who rely on them. After all, companies are increasingly keen to get rid of cash: to remove the need to collect, count and bank physical currency, or the risk it could be stolen, from the system entirely.

(All this begs another question: if the future is payment made by card then, on a personal level, are currencies still relevant? Does it matter that this croissant is priced in pounds, dollars or Azerbaijani manat? It’s just a number that needs to be removed from your bank account. And given that many UK banks justify charges because we’re not paying in sterling… It’s almost enough to convert me to the Euro.)

All this is a very physical manifestation of the more benign aspects of globalisation. Why bother with foreign exchange bureaux when you can simply whip out the same card you use at home?

Well the reason why, obviously, is those charges. A spokesman for the UK Cards Association heavily implied it’s a matter for consumer choice – it’s our responsibility, it seems, to opt for one of the fewer than 10 cards available on the current market with no charges at all.

This is passing the buck. Given that a press officer from my own bank told me “You know, I’d never thought about using contactless abroad”, we clearly still have some way to go on this one. It’s a relatively new phenomenon and one that won’t have crossed many people’s minds until they’re confronted with a locked toilet door and a £1.50-per-transaction charge on the next bank statement.

A preferable option would surely be for banks to work with partners abroad, and start harmonising how we all pay for things. If only there was some kind of international union in which diverse countries could work together to improve the lives of their citizens.

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