UK banks to face low-cost challenger for contactless payments
17 May 2007 | 9636 views | 0
UK-based start-up sQuidcard is to launch a low-fee alternative to the national contactless programme promised by the nation's biggest banks and credit card schemes MasterCard and Visa.
Barclaycard, Citi, Bank of Scotland, Halifax, HSBC, Lloyds TSB, and Royal Bank of Scotland are all participating in the first phase of a national programme to introduce contactless debit and credit cards across the UK. The scheme, which is being introduced initally in the South East in September, will target low value transactions of £10 or under.
The banking community has yet to set a retailer transaction fee for contactless purchases, but sQuidcard is promising a fee of ‘never more than 1.5%’, which the vendor says in many instances would be cheaper for retailers than the cost of handling cash.
Adam Smith, CEO of sQuidcard, says: "What the credit card companies and banks don’t tell you is how much they will charge retailers for these contactless transactions. At the moment it appears they intend to charge similar fees to those that apply to credit and debit card transactions – which is in our opinion far, far too high for buying the little things in life."
SQuidcard estimates that an average debit card transaction fee is about 18p, so buying a £1 newspaper will incur a charge of 18p. By contrast, the same transaction conducted with sQuidcard's 'tap and go' eMoney cards would be 1.5 pence.
SQuidcard parent company Nucleus appointed investment bank Rothschild in May last year to raise £15 million to fund the scheme, which has been developed so as to be compatible with the UK transit card Oyster.
Smith says the first eMoney cards will be introduced in the North West this Autumn, with further trial sites within the M25.