Londoners will be the first UK residents to be issued with contactless credit and debit cards to pay for low value items following the banking industry’s agreement on a national standard.

The rollout of contactless cards in September will involve all major banks and pave the way for a national rollout, according to the banking industry body Apacs.

Customers will be able to pay for items under £10 at selected retailers in the City and Canary Wharf by simply tapping their cards on a reader at the till or vending machine.

Until recently, individual banks were conducting their own trials of the technology, including the Royal Bank of Scotland and Barclaycard.

‘This initiative will be on behalf of the whole banking industry and not just individual card issuers,’ a spokeswoman for Apacs said. ‘It would be nonsensical if individual issuer’s cards could only be used at certain retailers.’

The initial rollout will be focused on seven London postcodes, with as many as 2,000 retailers and selected cardholders to be chosen to take part in the scheme.

Following the launch, contactless payments will be expanded to the rest of London, with a gradual rollout nationwide in 2008, says the spokeswoman.

‘The cost of infrastructure will be determined by commercial negotiations between the card issuers and merchants,’ the spokeswoman said. ‘But many smaller retailers lease their payment terminals from the banks, so it may simply be a case of leasing new terminals.’

Banks planning to take part in the first phase of the rollout include HBOS, Citi, Barclaycard, Euroconex Technologies, HSBC, Lloyds TSB and The Royal Bank of Scotland (RBS).

Industry estimates suggest that over five million contactless cards will be issued by the end of 2008, and that they will be accepted in at least 100,000 merchants.

Contactless payments have already been trialled by RBS and Mastercard, at the bank’s Edinburgh and London offices.

Some 1,500 staff have taken part, completing more than 40,000 transactions at the bank’s restaurants, coffee shop and other retailers.

‘Research among our employees reveals that nearly three quarters say it is better and faster than paying with cash and 86 per cent say it is more convenient than paying with Chip-and-PIN,’ said RBS head of business development David Rockliff.

And Barclaycard has completed trials of a smartcard that combines contactless payment, Visa credit card and Oyster travel features (Computing, 22 March).

The company has been testing the smartcard with about 80 staff at its Northampton office, and recently widened the pilot to another 2,000 employees.

Retailers would welcome contactless payments, says a spokesman for the British Retail Consortium, particularly those that primarily offer low value items such as newsagents and coffee shops.

‘There are significant benefits in taking cash handling out of the business and it could also reduce transaction times,’ he said. ‘But retailers will have to look closely at the costs of infrastructure and decide if it is a positive step forward.

‘It is about responding to consumer needs and if consumers are willing to try out the technology, then you will find retailers will be willing to adopt it also.’