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Barclays PLC this week began issuing its first Visa-branded contactless debit card. The United Kingdom-based financial institution expects the effort will lead to most of its debit cardholders having chip cards by 2011. Barclays expects to issue 3 million of the cards this year. The bank has a UK debit card base of 11.7 million, all carrying the Visa brand, a Barclays spokesperson tells CardLine Global. Consumers can use the cards for contactless purchases of up to 10 UK pounds (US$14 or 11.20 euros). They can use the chip-and-PIN function on the cards for larger purchases and for ATM withdrawals. The debit card effort follows a similar push by Barclaycard, the financial group's credit card arm. The issuer late last year said it met its goal of issuing at least 1 million contactless credit cards in the UK, a target met in large part by replacing cards held by customers of the Goldfish card brand, which Barclays bought from United States-based Discover Financial Services. Some 8,000 UK retailers accept contactless cards, and that number should "grow exponentially" in the coming months as more of the bank's customers use the cards and recommend them to other consumers, the Barclays spokesperson says. Barclays does not expect contactless card payments to be a "fad," the spokesperson says. Because adding chips to cards costs about an "extra buck" per card, Barclays' debit card push seems surprising to do in the worsening economy, Nick Holland, an analyst for United States-based research firm Aite Group, tells CardLine Global. Other major UK issuers, such as the Royal Bank of Scotland, likely will lag behind Barclays on contactless, he says. In fact, Barclays' competitors could "leapfrog" contactless cards in favor of mobile payments enabled by Near Field Communication, he says. That technology, being tested around the world, likely will not see rollouts for at least another year or two, according to observers. Unlike regular contactless chips, NFC enables two-way communications to support both payments and downloads of coupons and other perks from other NFC chips.
