We are always arguing the toss over contactless payments on this desk. I’m definitely in the ‘pro’ camp, having been completely won over by the speed and convenience of it.
From the other side comes the offline argument. The fact that contactless payments are offline, by definition – argues my group editor – makes them a recipe for disaster. And although it pains me to say it, I am inclined to agree – to a certain extent anyway.
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It is true, one has to wonder why exactly banks are so keen on contactless cards – what’s really in it for them? What incentive is there to issue a whole load of new, more expensive, cards? Once consideration is made as to how offline payments are an invitation to fall into unauthorised overdrafts, then a picture begins to form.
Different banks have different daily limits for the number of contactless transactions that can be made. The numbers are kept under wraps to keep fraudsters on their toes, but they vary between around five and ten.
Imagine a scenario whereby a customer has insufficient funds in their account but taps merrily away through ten contactless transactions – said customer could find themselves landed with a whopper of a bill in the form of accumulated unarranged overdraft fees to the tune of as much as £250.
I have not heard many cases where this has happened, and most banks now actively encourage people to sign up to unarranged overdraft alerts to allow a grace period in which the customer can credit funds to an overdrawn account before the end of play.
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By GlobalDataAll that aside – as if it wasn’t bad enough – the real point here is that lost or stolen contactless cards can still be used to tap and pay long after the card has been cancelled. Quelle horreur.
It turns out the contactless chip continues to work, regardless of whether the card has been cancelled or not. And that the banks still have not addressed this issue.
Payments were being tapped on a cancelled card up to eight months after cancellation, in one unfortunate punter’s case as reported in a story by MoneySavingExpert.
He got his money back and some compensation from the bank, but it poses a very precarious and uncertain situation: banks basically have done little to nothing to exercise control over the fact that contactless chip offline payment functionality cannot be cancelled with the card.
Now, despite the fact that customers will always get their money back, it seems (and I’m careful with my choice of words here) careless at best on the banks’ part not to have foreseen the consequences of offline contactless transactions. Even if such matters are small fry to them, there are bound to be further incidents covered in the media about this and it does very little to salvage dented credibility or trust issues.
Another feature I like (and group ed does not) is having transactions tracked. I would likely spot a dubious transaction and flag it if not on the day, the day after. Others do not check as readily, and therefore may stand more likely to fall foul of a situation where the onus should lie with the bank to be vigilant and better monitor offline contactless transactions.
When are the banks going to sort this out?
