The UK banking industry confirms plans for the national introduction of contactless technology on UK credit and debit cards. Contactless is a new option being introduced on many payment cards, from September 2007.

Contactless technology will be available for transactions of £10 or under, where customers will simply hold their upgraded card up to a secure reader to make their payment in participating retailers, outlets and vending machines. Contactless cards provide customers with a fast, effective, easy-to-use alternative to cash, building on the same highly secure technology of chip and PIN cards.

The rollout will start with a London launch focused on seven postcodes - from The City to Canary Wharf - (EC2, EC3, EC4, E1, E14, SE1, SE16). The initial launch will involve a mix of retailers and selected cardholders who regularly use their cards in these postcodes either to buy goods or take cash out of cash machines.

The card schemes, Visa Europe and MasterCard, who are leading the rollout, will provide more detail over the next few months. After the initial launch the upgrade will expand across London, followed by a gradual national upgrade in 2008. This will involve card issuers replacing debit and credit cards to their own timescales, and those card-accepting businesses who decide to offer contactless transactions increasingly upgrading.

Depending on your card company, contactless technology could be added to your existing credit or debit card, or you could even be offered a new contactless card. Cardholders do not need to do anything: they will be contacted by their card company and given full details as they join the rollout. More information is available from either MasterCard www.paypass.com or Visa Europe www.visaeurope.com/aboutvisa/products/visacontactless.jsp

Industry estimates suggest that over 5 million contactless cards will be issued bythe end of 2008, and that they will be accepted in at least 100,000 merchants. The system is extremely easy to use; all a customer needs to do is hold their card up to the contactless card reader. Although making a contactless payment does not routinely require a PIN to be entered, the chip on your card will track activity and as a security feature will request a PIN from time to time. Each time a PIN is used it re-affirms that the cardholder is in possession of their card.

There are currently in excess of 20 billion payments under £10 in the UK with a value of approximately 200 billion per year. Contactless technology will increase the likelihood of a card being used for small value transactions and increase the places where they are accepted: for instance in coffee shops; newsagents; and in taxis. Cards containing this contactless feature will carry the easily recognisable symbol and customers will be able to use their cards anywhere they see the symbol at home or abroad.

This new contactless technology being introduced in the UK has been developed by the card schemes to a global standard, which means that UK customers will be able to use their contactless-enabled debit or credit card in any other country that has adopted this technology. Contactless technology has already been successfully introduced in the USA, and many countries across the world.