Transport for London is gradually replacing Oyster card with a more open approach to contactless payments
Transport for London is gradually replacing Oyster card with a more open approach to contactless payments © Bloomberg

In the early 1990s, when refuting the gateway drug theory, comedian Denis Leary argued that marijuana use was more likely to lead to carpentry than to harder drugs. Perhaps these days the tendency to construct different delivery mechanisms for one’s drug of choice might be called “bong craft”.

Creative impulses like these have in more recent times been applied to the Oyster cards used for ticketing in London’s public transport system. In 2008 in particular, there was a movement towards “Oyster craft” when chips removed from cards were embedded in all manner of things. A witch’s wand that “magically” opened ticket gates went down especially well. For me, it was a gateway drug: Oyster was what started me on the path to contactless payments.

First my annual ticket was loaded on to an Oyster card, which I suppose was innocent enough. But then came the occasional pay-as-you-go bus journey on a debit card when I forgot my Oyster. Before I fully comprehended what was happening, I was paying for lunch by tapping the same card just about everywhere. Now I’m even using my mobile phone for contactless payments and I reckon this trend has not gone unnoticed by the smartwatch, which will undoubtedly find a way to get involved soon.

While the exact path that brings one to use contactless will vary from person to person, one thing is certain: we who tap to pay are not alone. Data from the UK Cards Association show that the number of transactions made annually using contactless increased 12-fold over the past two years, with £2.3bn being spent this way in 2014. But is this a bad thing or is it as harmless as “smoking a joint, eating a couple of Twinkies, and going to sleep”, as Mr Leary would say?

As I see it, there are two big risks with contactless. The first concerns security and on this count, the system for these payments — in the UK at least — appears relatively safe. The underlying payment protocol is the same as that used for chip-and-pin.

Non-contactless fraud also remains vastly more profitable. False fronts on cash points can be used to skim a card’s information from its magnetic stripe and cameras can record the pin entered. Getting rid of the stripes would be ideal, but they are there to facilitate transactions made by cardholders when they travel to countries that are still living in the payment technology dark ages. Such as America.

There is also a cap on contactless payment. In the UK, this is being raised over the course of September to October of this year from £20 to £30 per transaction, but this change seems unlikely to make a difference in levels of fraud.

Thus it seems that the far bigger risk is the second one: increased abstraction. Cash is a physical representation of units of a currency that itself has value because a government says it is legal tender. From there, its value fluctuates on the basis of supply and demand. Cards make money more abstract and contactless even more so, chiefly because of how detached one is from such a payment. Friction, which might give one pause for thought, is almost entirely absent.

This was most clearly brought home to me when I handed my card to a waitress, expecting her to insert it into the mobile reader and hand the contraption to me to enter my pin. Instead she handed my card back. She’d taken payment by contactless without asking. This is increasingly common. The next time this happens, I might just as well hand the server my wallet, since I should apparently trust them to take out the right amount and hand the rest back to me.

Banks and businesses love contactless though. Payment is faster and people may well spend more when it’s this easy. And as such, companies aren’t done convincing us. As part of a broader campaign, Visa and ITV recently entered into a product-placement agreement “which will see Visa contactless terminals appear in key shops and outlets on [the TV soaps] Coronation Street and Emmerdale”. Barclays, meanwhile, has taken a page out of the Oyster craft book and is trialling a contactless wristband (no Barclays account necessary). As a final confession: I’m waiting for mine to arrive. It’s purple. And it’s a slippery slope indeed.


lisa.pollack@ft.com

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Letter in response to this column:

Sing ‘Happy Birthday’ twice before paying / From James H Sinclair

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