A revolution is taking place in how we pay for items on the High Street – cash has been replaced with plastic. According to the UK Payments Council, the annual debit card spending surpassed cash expenditure for the first time ever in the UK over the 2010 August Bank Holiday. Since the introduction of Chip & Pin, using plastic has become more and more popular due to its convenience.
However, back in February 2011, the first major contactless prepaid MasterCard was launched in an attempt to simplify and make transactions more convenient. However, most contactless cards (prepaid or credit card) can only be used for payments with a value no more than £15, unless you enter a PIN, for security reasons.
Since then, the Isle of Wight Festival has trialled a new payment method in the form of contactless wristbands called MasterCard PayPass and we have seen the introduction of "QuickTap" on mobile phones.
Prepaid Cards
Prepaid cards are very simple to use, you load the card with money and can then use it to withdraw cash or make purchases in stores. Once there is no money left on the card, you are unable to use it again until you reload it – similar to a PAYG mobile phone. Most prepaid cards in the UK are issued under MasterCard, Visa and Maestro, meaning that they are well known brands and widely accepted throughout the country.
Benefits
The reason that these prepaid cards are becoming so popular is because they save you having to risk carrying large sums of cash, you do not require a credit check, they help you budget and manage finances, and are perfect for teenagers.
In partnership
Prepaid cards are already quite convenient as they work in the same way as our standard credit or debit cards, however, things can be made a whole lot quicker and simpler by pairing up with contactless technology. This development in technology could have a significant impact on the prepaid card market and start making them a realistic substitute for cash.
Wristbands
The research carried out the Isle of Wight Festival suggests that prepaid contactless technology was very popular – 98% of people said the wristbands were easier to use than traditional forms of payment, including credit cards, and 100% of people said they hoped they had another opportunity to use them.
Mass market
Although the wristbands have only been trialled at festivals, there is a plan in place to roll this out into stores should further testing have equal success. Currently, there is no reason that the same simplicity and speed which attracted so many people to the wristbands could not be applied to prepaid cards. The US is currently seeing rapid growth with contactless technology and credit cards, but due to our Chip & PIN facility, the technology is far greater suited to prepaid cards.
Security
The system for cardholder verification when making contactless payments that is currently in place means that users are only asked to enter their PIN occasionally and this is something that many people are concerned about. However, the £15 cap on PIN-free purchases drastically reduces the risks of huge losses. The fact that prepaid cards aren’t linked to a bank or credit account makes them the ideal solution for consumers who are worried about using standard credit and debit cards.
