UK Post Office Looking to Go Contactless in 2012

Jun 24 2011

The Post Office Ltd. in the United Kingdom is planning to roll out new point-of-sale terminals accepting contactless payment cards at its nearly 12,000 branches starting next year, NFC Times has learned.

Updated: The UK Post Office is planning to equip all of the branches–with a total of 30,000 to 35,000 contactless POS terminals–by October 2012, Michael Birchall, payment product manager for the Post Office, told NFC Times. The agency also plans to issue a contactless general-purpose prepaid card as well. The agency, while saying it was not contradicting Birchall's statements, later stressed it has made no final decision on either of the rollouts. End update.

The rollout of the contactless terminals would probably make the Post Office the largest merchant in the United Kingdom accepting contactless payment in terms of locations.

Besides selling postage, envelopes and other mailing products, the Post Office offers a range of financial services, including bill payment, insurance, money changing and banking, though it is not a bank, itself. Its sister organization, the Royal Mail, delivers letters in the United Kingdom.

Birchall said the Post Office has to change its point-of-sale terminals and wants to be ready to accept contactless as banks roll out more contactless credit, debit and prepaid cards. The faster transactions that contactless technology offers would cut queues in branches, he said, noting that 60% of the agency’s transactions are for less than £15 (US$24.34), the present UK limit for purchases before consumers have to insert their cards into terminals and conduct chip-and-PIN transactions.

“As far as speed, someone doing a tap to buy postage is faster than handing over a £10 note or a chip-and-PIN transaction,” he told NFC Times.

The rollout would rank the Post Office ahead of Transport for London in terms of contactless terminals. The London transit authority is planning to accept bank cards directly to pay fares at more than 20,000 contactless terminals next year, including onboard buses and, later, at Underground and commuter rail stations.  

At present, there are about 60,000 contactless POS terminals installed at merchant locations throughout the United Kingdom and 15 million contactless bank cards on issue.

The agency now uses noncontactless terminals from U.S.-based Hypercom. Its merchant acquirer is WorldPay.

Birchall said the Post Office is interested in rolling out a general-purchase prepaid card because many of its customers are unbanked or underbanked. The organization might decide to issue the contactless card itself, using an exemption to the European E-Money Directive as implemented in the United Kingdom. Or it might find an issuing partner if it decides to go ahead with the launch.

The Post Office already issues a prepaid travel money card, processed by U.S.-based FIS. It also has about 3.5 million benefit cards on issue to store pension, unemployment and other government benefits.

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