Contactless on Ombudsman's radar

The Financial Ombudsman Service has received "quite a number" of inquiries and dispute allegations about contactless card payments over the past year.

The FOS reported in its 2010/11 financial report, released this week, that many consumers wanted to know how the cards worked and how they would be protected from security breaches.

This suggests that issuers have not done an adequate job of explaining how the Visa payWave and MasterCard PayPass systems work.

The contactless system has been progressively rolled out to Australian retailers and consumers over the past year. Last week, Coles said it planned to install payment terminals with radio frequency technology in its supermarkets.

Some consumers have been concerned that their financial institution won't allow them to choose a MasterCard or Visa card without the contactless payment function.

The FOS said this was a policy matter for the issuer and not something the Ombudsman could get involved in.

The FOS said it could consider unauthorised transactions using a PayPass or payWave card. In such cases it would apply the provisions of the Electronic Funds Transfer Code of Practice.