Money Insider: After chip and PIN, it's the contactless card revolution
Saturday 06 November 2010
It is almost five years since chip and pin was officially introduced in the UK, a payment mechanism that we now all take for granted. In fact, if you happen to visit parts of the world where this technology hasn't yet been implemented, it seems alien to have to sign to confirm your purchase.
The latest phase of plastic card technology is focusing on contactless payments. The project gathered pace this week as MBNA and Virgin Money announced the rollout of more than five million new contactless cards by the end of 2011. Contactless technology appeared in Britain in 2007 and it is estimated that one in every seven debit or credit cards will be enabled by the end of this year. With cheques due to be phased out by 2018, it will undoubtedly receive greater focus going forward.
Even though the maximum transaction you can undertake at a contactless terminal is £15, it is understandable that some people may feel a little apprehensive of being able to make purchases without pin authorisation. Even though card providers have security checks in place, experts feel that criminals are unlikely to target these new-style cards because of their low-value transaction limit.
As a precaution, if a contactless card is used for a number of consecutive transactions in a short space of time, the customer is asked to confirm their pin. There are also be occasional spot checks asking for pin verification as a separatesecurity measure. Despite initial concerns, there are many positives – contactless is secure and convenient and the ultra-speedy transaction times will lead to shorter queues for small purchases you make in a hurry, such as a sandwich, a coffee or The Independent.
The 'Junior Isa' will need support
the specific savings vehicle being introduced for children next autumn is welcome. However, without any incentive or contribution from the Government, and with savings rates at such a low ebb, it is difficult to see this being a great success.
It's sensible to use the term "Junior Isa" to help to get children to appreciate the benefits of tax-free savings as they grow up.We need to revive the savings habit in the UK, but with such low rates, it is a big challenge to persuade the man on the street that regular saving, no matter how small, is still a worthwhile exercise in the longer term.
Let's hope more providers will embrace the cash version of the Junior Isa compared with the dozen or so that offered the cash version of the Child Trust Fund.
RBS and NatWest's overdraft fees cut
Providers continue to tweak their tariffs for authorised and unauthorised borrowing and last week was the turn of RBS and NatWest.
It was good to see the number of fees being reduced – particularly the removal of the £20 monthly maintenance charge and £15 paid referral fee – but customers should be given more than a £6 buffer before being charged. Most RBS/NatWest customers will now be paying less, apart from those overdrawn for at least 20 days per month. The introduction of a new text and email alerts service should also help some of these customers avoid unauthorised fees.
To prevent being hit with these potentially crippling unauthorised charges, the best course of action is set up an agreed (authorised) limit with your bank in case of emergencies.
If you find yourself always overdrawn, there's possibly a more fundamental problem, and it's probably time to sit down and work out how much you're paying out each month compared with your income, and make cutbacks where you can.
Andrew Hagger is an analyst at Moneynet.co.uk
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