In UK Visa advertises contactless payments heavily, so do banks. They offer cashbacks on contactless payments or enter you in some kind of tombola. What benefit do VISA and the banks have when you pay contactless? I can see the theoretical advantage for small shops by being able to serve costumers quicker, but the banks?

  • Could you clarify how this is related to personal finance? – ChrisInEdmonton Mar 20 '15 at 15:03
  • i thought it has to do with personal banking. I tried to find a good stack-exchange category, and thought it might fit here. If you have another suggestion, I am happy to post the question somewhere else – P.R. Mar 20 '15 at 15:04
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    Contactless cards use a different system of tokenization and transmission of encrypted banking details. It is much more secure. I think this information is relevant, but without any formal knowledge of their banking practice and marketing, I couldn't comment further. – BrownRedHawk Mar 20 '15 at 15:24
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    I suspect it's being heavily advertised to compete with the also-contactless pay-by-phone systems, which are the biggest threat credit cards have faced in decades. – keshlam Mar 20 '15 at 16:47
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    While the card may be more secure than chip-and-pin, the method is inherently less secure. Any lost card, until it is cancelled, can be used for a number of transactions up to the transaction limit (£20 in the UK), or until the card randomly requires a PIN transaction. – Andrew Leach Mar 20 '15 at 21:21

Payment processors get a fee when you make a payment through their system. So by encouraging you to use their cards more, they make more money.

In the specific case of contactless cards, they see an opportunity to grow their market by displacing cash payments. So they're advertising it heavily to help that along.

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  • Not just cash. In Australia Visa/MasterCard have been promoting contactless credit cards as a more efficient method of electronic payment in an attempt to capture more market share from EFTPOS. – Kelly Thomas Mar 20 '15 at 20:17
  • ok that makes sense. I assumed all "card makers" have the contactless feature. Therefore, I thought there is not much to gain for anyone by pointing at this feature alone. – P.R. Mar 23 '15 at 11:38
  • As it happens, they don't - I actually just moved credit card companies to get a contactless card, as my existing one has no plans to add them. – GS - Apologise to Monica Mar 23 '15 at 11:41
  • I moved card companies so that I could NOT have a contactless facility - my original card issuer did not give a choice, I had to have it. – Vicky Mar 25 '15 at 8:36
  • I almost did that when the first card switched so I could keep my Oyster card in my wallet, but it quickly turned into a lost cause as most card companies moved over. And now I find I actively want it for other things. – GS - Apologise to Monica Mar 25 '15 at 9:20

At least in the US, one reason could be the "liability shift" that encourages adoption of chipped and contactless cards by shifting the fraud liability to the party that caused the transaction to not use chip-and-PIN / contactless payment: either the merchant (by not having a new compatible terminal) or the card issuer (by not providing the customer with a compatible card).

This means the issuers will try to replace old, magnetic-only cards as soon as possible once adoption of the liability shift is certain.


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