Industry agrees restrictions on mobile payments swipe technology

Banks and mobile phone networks are trialling the use of phones as replacements for payment cards. They are being used as 'contactless' payment systems, meaning that they can be swiped over sensors and phone bill credit used to pay for items.

The Government has said that it has addressed its concerns about abuses of the system with the mobile industry and that steps have been taken to limit the liability of users, and young people in particular.

"[Mobile networks and banks] have committed to ensuring consumers are not put at an increased risk due to the development of this technology, especially young people who are often the earliest adopters of technology and suffer from disproportionate risk.

On 1 November the law will change in the UK when the European Union's Payment Services Directive comes into force. This will allow non-banks to offer payments services as long as they are regulated by the Financial Services Authority (FSA).

This could lead to an increase in the range of payment services being offered using technologies such as mobile phone-based contactless payment systems.

"These guidelines are an important step forward in protecting the public from criminals," said Home Office Minister Alan Campbell. "I am pleased that the mobile and banking industries have worked with us to ensure that the public are protected at the earliest opportunity."

"This technology is an exciting new development but we must continue to work together to reduce any new opportunities for criminals to profit from mobile theft. As new technologies like this develop we aim to consider where safeguards can be incorporated at the drawing board stage," said Campbell.

The guidelines stipulate that transactions over £10 will need a personal identification number (PIN) to be validated, and that the same rule will apply when a number of transactions under that threshold are carried out in quick succession.

The guidelines also instruct providers to make sure that it is possible to disable contactless payment phones "as soon as possible" when their theft is reported. Providers will also encourage customers to register their phone with theft database the National Mobile Phone Register.

The Government recently launched a consultation on the use of contactless payments in the UK's travel infrastructure, which was seen as a move to put some structure on that part of the payments sector ahead of November's law change.