If you always run out of coins and small bills to pay for low-value items like coffee, a newspaper or a sandwich, you may want to consider going "contactless."
Banks in the UAE have issued thousands of debit and credit cards with contactless technology, allowing users to pay for small-ticket items that cost as low as a dirham simply by tapping their plastic onto a special card reader at the cash counter.
They work like a regular credit or debit card in the sense that there's no cash involved, but no signatures and online approvals are required and the payments are said to be quicker and the queues shorter.
This "wave or swipe and pay" technology, branded as payWave by Visa and PayPass by MasterCard, is dubbed the next big thing in the cashless world.
Contactless has not really taken off in the UAE yet, but in reality, consumers have been using the concept without realising what it is.
At the Dubai Metro and public buses for instance, passengers just tap their Nol card to pay for tickets.
There are ongoing efforts to make the technology gain wider presence in the country, with banks and merchants — grocery retailers, coffee shops and restaurants — either currently pilot testing it or rolling it out.
HSBC in the UAE recently issued around 40,000 debit cards equipped with the technology that can be used in approximately 100 outlets of about 12 merchants that accept Visa. Emirates NBD also released similar cards which may now be accepted at close to 500 point-of-sale locations.
Visa has partnered with two of the UAE's largest banks to introduce the technology in the country. Kamran Siddiqi, Visa General Manager for Middle East, said their pilot programmes are still currently in the testing phase, but so far the response from retailers and consumers has been encouraging.
MasterCard has also launched contactless payment programmes in the UAE and has issued 78 million cards and devices in 36 markets globally, according to Eyad Al Kourdi, Vice-President and UAE Country Manager at MasterCard Worldwide.
One of the partner-banks, Emirates NBD, launched in 2007 the Dubai Internet City MasterCard PayPass credit card, allowing customers to make contactless small-ticket purchases, as well as large payments and cash withdrawals.
Last year, the bank launched the contactless watch credit card, which enables customers to make contactless payments that cost less than Dh100.
Contactless technology has been around for a while and is already established in other parts of the world.
Consumer acceptance
However, it may take some time for contactless payment cards to gain consumer acceptance in the UAE due to limited participation among retailers and cardholders' reluctance to use it due to fraud concerns.
"The [penetration rate] is still very small. A large number of retailers still need to be educated and made aware of the benefits of this technology," said R. Sivaram, Senior Vice-President and Cards Business Head at Emirates NBD.
Christopher, an expat in Dubai, recently received his new debit card that is equipped with contactless functionality, but he is not excited or keen to use it.
"I haven't found anyplace to use it. I don't know how it works and frankly, I don't care. I don't know what it does better than what the traditional cards are already doing. My bank didn't explain it to me," he said.
"The only reason I got this card is because my bank told me that it's the new ATM or debit card. I'm just happy to use my debit card. This additional feature makes me scared, though. I read on the internet that the technology used in this card is not secure. Now I'm thinking about buying a special wallet to protect my debit card from being hacked," he said.
Low awareness
David Parker, Director of Polymath Consulting, admitted that the new payment technology has a very low awareness and retailer acceptance in the UAE.
"It is a chicken and egg situation, where if cards are in the market, retailers will install contactless terminals. Banks will respond by saying, if there are contactless terminals, then they will issue cards. Which comes first?" Parker noted.
Since contactless cards are generally restricted to low-value transactions, the technology can roll out more quickly in fast-food outlets, transportation points and small stores that do not have integrated electronic point of sale yet.
However, big retailers only replace their point-of-sale terminals every five years, so Parker said there is a lead time until they will install contactless devices.
Richard Musty, managing director at Lloyds TSB Middle East, however, is optimistic that UAE residents will embrace the payment concept in the short to medium term, or once they fully grasp the advantages of it.
"It will take a bit of time. The urgency and speed will grow as we see what's happening in other parts of the world where this payment method has been hugely successful," Musty told Gulf News in a phone interview.
Although some card payment innovations like the chip and PIN functionality have been well received by UAE consumers, he said there's still a lot of cash in circulation in the UAE.
He noted that in other cashless societies like Hong Kong, consumers are widely using virtual wallets like mobile phones or prepaid cards that are accepted across a broad spectrum of retailers.
James Pearson, head of asset and liabilities at HSBC UAE, said customer and merchant awareness play a vital role in the uptake of contactless payment, and it is the issuing bank and card partner who have the responsibility to drive this.
"This technology is fairly new in the UAE and in the Middle East, and we expect customers to use this feature actively…We are proactively pursuing a rollout of payWave readers at merchant terminals through our partner, Visa, to facilitate greater acceptance of contactless card payments," Pearson told Gulf News.
Sivaram said the acceptance and level of interest shown by customers has already been extremely encouraging, but both merchant and customer education needs to be further enhanced.
"In most mature markets, where this technology has been successful, essentially they have combined this technology in their public transportation networks. In the UAE, the Metro is a very recent phenomenon and as the popularity of the network grows, the public at large will be more exposed to contactless technology in general. We believe in a couple of years, the use of contactless technology in the UAE will be as prevalent as in any part of the world," Sivaram told Gulf News.
Have you used contactless cards for payments? Which is the most convenient form of payment for you? Tell us at readers@gulfnews.com
