Barclaycard PayTag targets contactless payments market

Barclaycard has launched a stick-on credit card which will allow its 12 million customers the chance to make wave-and-pay purchases from their mobile phone or other item of their choice.

The PayTag is a quarter of the size of a traditional credit card and will sit unobtrusively on any mobile handset or other item, and is linked to a customer's traditional credit card account. It will let them make purchases in any "contactless" store, restaurant, and even on public transport.

Barclaycard hopes the move will trigger the mass take-up of contactless payments that has so far proved elusive.

In May, a select group of its credit card customers will be the first to receive the cards, with every cardholder eventually offered the free upgrade.

David Chan, CEO of Barclaycard Consumer Europe, said: "More than half of us say that the item we're most lost without is our mobile phone, so we're giving people the option of using them to make easy, convenient, everyday payments without the need to upgrade their current handset."

Currently, a number of banks allow customers to make contactless purchases with credit and debit cards. The payments do not require a pin number on purchases up to a maximum set by the bank. This is currently £15, but is set to rise to £20 in June.

Retailers accepting contactless payments have also been largely limited to coffee shops and a few larger stores such as Boots. However, the scheme received a major boost in January when McDonalds announced it was using the new technology in all its 1,200 outlets in a bid to cut queue times.

Visa predicts the number of contactless point-of-sale terminals in the UK will rise by 50% to 150,000 in 2012. The London Olympics is set to be the first contactless games, and major retailers that offer contactless payments will soon include Waitrose, WH Smith and Tesco. By the end of 2012, London buses will also accept contactless payments, followed by the Tube and the rest of the capital's transport network in 2013.

Trials of contactless payments around the world have seen users buy items in shops with "near field communication" technology embedded in their mobile handset. However, until now a lack of such handsets among consumers has held up the revolution.

PayTag, however, allows the card holder to turn any item into a mobile wallet.

Unlike existing credit and debit cards that can be used contactlessly, PayTag doesn't require a pin to be inputted every few transactions. Barclaycard has said it comes with the same 100% fraud protection as its other cards, and has promised to refund anyone who loses their card which is then used fraudulently.

This promise could be severely tested in months to come when users start leaving phones on buses late at night, and thieves realise they can make as many payments as they can before the card is reported missing and cancelled.

In March, Barclaycard parent company Barclays launched Pingit, a way to send money between bank accounts using a mobile app. It is predicted that £3bn of purchases will be made with mobile phones in the UK in 2016.

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