Now that more than one in ten retail card transactions is in the UK is contactless, I think we’re beginning to approach a tipping point around the technology. This is important, because I think it’s a tipping beyond contactless cards and towards mobile and then in-app. I make it my business to collect and collate the weak signals for change around POS, so with that in mind, here’s a recent story from the UK newspapers. A customer was outraged to be surcharged for making a low-value payment with chip and PIN in a fast food outlet.

Bill was faced with this charge at Subway in Brislington, Bristol, where customers were being asked to pay 10p more for using a debit card that wasn’t contactless.

[From No contactless card? That’ll be 10p extra – the Subway charging people MORE to use Chip and PIN – Mirror Online]

I don’t have a problem with this at all and I don’t understand why the readers comments were negative. For one thing, I love Subway sandwiches and for another thing it makes complete sense from any informed perspective for both retailers and customers (almost all of whom have contactless cards anyway and those who don’t can always use Apple Pay, Samsung Pay, Android Pay, a sticker, a watch, a wristband or whatever else). Contactless debit card payments cost the retailers less (and since most low value card payments are debit, that means most low value card payments cost the retailer less) and putting your chip card into a reader and then punching in a PIN wastes time your time and everybody else’s too. I wouldn’t be at all surprised to see more retailers surcharging people who do not pay contactlessly or, any day now, who do not pay in-app.

Overall, 83% of consumers use less cash than they did a year ago with 19% saying they are annoyed if they cannot pay using contactless cards or devices.

[From Bar news | Contactless payments at bars and pubs nearly double]

I wrote about this couple of years ago when I pointed out how illogical it was for retailers to have signs that said they would accept card payments only for transactions above a certain level when it would have been more logical to have signs that said that below a certain level they would accept only contactless card payments. 

It baffles me that some retailers ban you from paying with cards for transactions below £10 when it would be more logical for them to say that transactions below £10 must be contactless

[From Retailers could take more advantage of contactless | Consult Hyperion]

Now, since the acquirers have to price contactless debit payments below their price for contact payments (otherwise they are not a viable cash replacement product) retailers are therefore incentivised to steer to contactless. If you are buying a £5 sandwich, the contactless interchange is only 2p and there’s a limit to how much the acquirers can add on top in a competitive market, hence Subway’s entirely logical structure. Incidentally, this is nothing new. Subway in the UK have always been at the forefront of payment technology. Here’s Forum Friend Julian Niblet writing about them back in 2013:

At least Subway (I really do eat better than this) have a sign which allows you to pay by contactless for any value but has a minimum spend for credit and debit. Somebody there has at least done some maths and realised that they ought to use the nice new kit they have installed.

[From A fresher way to pay? | Consult Hyperion]

Personally (as some of my Twitter correspondents observed) I think Subway should charge 10p more for cash as well, since when customers pay by cash they rarely have the correct change. This means that the person serving has to open up the register and count out the change. But the main issue is how the retailers choose to configure the POS and set the floor limits. Here’s what someone who says they were a Subway employee had to say about the matter.

Standing at the till with a que of 30-40 people you would long for them to pay in cash as subway do not have their card machines connected to the tills. Therefore you have to input the cost, wait for the customer to insert their card,( only after you imputed the price or the machine would crash) and then wait painful minutes on occasion for the machine to contact the bank and have a reply sent. When it comes to contactless it does it immediately.

[From No contactless card? That’ll be 10p extra – the Subway charging people MORE to use Chip and PIN – Mirror Online]

Now you can see why the retailer has the surcharge in place. And, as an aside, cash also also means that at the end of the day the manager has to cash up, reconcile the register and then deposit the cash, wasting even more time and money. Good on you, Subway.


  1. Hi,

    Unfortunately charging people for their payment method to simply encourage or discourage a preferred payment method is basically a “Penalty charge” on the retail contract. You are penalizing customers for their chosen payment method.

    This is illegal/unenforceable in UK contract law.

    The retailer is allowed to recur costs from the customer but they must be ready to demonstrate the charge amount correlates to their upstream charges.

    See the bank charge debacle for reference.

    To charge customers for simply choosing to use cash or Chip+PIN is bullying and a penalty clause. Both are annoying, unethical and potentially illegal.

    1. “This is illegal/unenforceable in UK contract law”

      Why make people using debit cards (which cost the merchant very little) subsidise the airmiles I get from using my credit card (which costs the merchant much more).

  2. Also. Consider what happens when the machine, when you attempt to use contactless, periodically says, “Please insert of swipe your card.”

    This is normal behaviour and all contactless cards do it randomly as a security measure.

    I was charged 25p when this happened to me and I was very, very annoyed as it was outside my control and not my choice. Effectively the retailer or their card merchant decides who has to pay the fee.

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