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Credit card usage has changed significantly since they were first introduced to the UK just over 40 years ago and now a new technological development is set to further alter the way people use their plastic.

There are currently over 31.6million credit cards holders in the UK, according to banking industry body APACS and the majority have been issued with credit cards that contain an embedded chip. More secure than storing information on the black magnetic strip on the back of the card, a chipped card can only be used in combination with a PIN number in special electronic card readers, until now!

However, the next generation of credit cards is going one step further, allowing transactions under a certain monetary value to be completed just by waving the card in the vicinity of a wireless card reader.

Within the contactless credit card’s microchip there is a radio antenna that allows the transmission of the card’s details to the reader when held in close proximity to the card reader device, eliminating the need to physically insert it into the reader and enter a PIN.

This new generation of plastic will soon become a regular feature throughout the UK. Indeed, they are already in use in London where they are linked into Transport for London’s Oyster card scheme. The benefit of such a card means that as more retailers sign up to the system, the need to carry bulky change to pay for smaller items will be significantly reduced. A quick wave of the contactless card will be all that is needed to complete the transaction.

Such card technology will undoubtedly benefit retailers as there will be a reduction in the amount of time taken to complete a transaction and in addition the need to keep large amounts of change on the premises will be all but eliminated; taking a large step towards a cashless society.

Although currently only being authorised for transactions under £10 on a contactless basis, as the technology becomes more established that limit looks set to rise. As more financial institutions seek to turn their plastic into multi-functional cards, products such as the contactless balance transfer credit card or even the contactless train season ticket credit card are sure to follow. The contactless credit card is here to stay and just how many innovative partners will be able to sign-up to offer unique pairings remains to be seen.

This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.