By Andy McCue
Monday, November 27 2006 10:00 AM
URL: http://www.zdnetasia.com/news/communications/0,39044192,61970330,00.htm

Visa is planning to introduce contactless 'wave and pay' debit cards to replace low-value cash transactions across the United Kingdom by the end of next year.

The technology will allow people to pay for low-value transactions such as coffee and newspapers that total less than £10 (US$19.50) by waving their debit card over a reader, without having to sign a receipt or enter a PIN number.

Visa claims this will make transactions quicker and reduce queuing times at checkouts. The technology could also be used in remote or unattended payment situations, such as vending machines, road tolls or parking meters.

Security checks will be made by asking consumers to enter their PIN number after a certain number of transactions.

Visa said its member banks have all signed up to the plan. Visa will introduce the contactless payments in London first and then across the rest of the United Kingdom by the end of 2007.

Sandra Alzetta, Visa Europe Senior VP for consumer market development, said the aim is for a cashless Olympic Games in London in 2012.

Alzetta said more than three-quarters of all cash payments are for less than £10 (US$19.50) and the introduction of contactless payments can therefore play a major role in encouraging the use of cards over cash.

Visa is planning on using RFID-enabled dual-use debit cards, based on its own Visa Contactless payment technology, but is also understood to be in talks with mobile manufacturers to use near field communications (NFC) technology that will enable a phone to be used instead of a card.

Visa and its member banks are now working together to get retailers on board and use the contactless payment system, with more details of the launch expected to be available by March 2007.

MasterCard and the Royal Bank of Scotland (RBS) have already announced their own plans to trial contactless debit cards for 1,000 of the high-street bank's staff at the retail outlets at RBS' Edinburgh campus HQ. The pilot will use MasterCard's PayPass technology.

But Transport for London put on hold its own plans to add contactless payment functionality to Oyster travel cards earlier this year, citing difficulties in sorting out the commercial arrangements, despite interest from retail outlets such as Pret A Manger.

Andy McCue reported for Silicon.com from London.