Next time you are in Bolton, Lancashire, hungry for battered sausage and mushy peas or the latest copy of The Times, you no longer need to worry whether you have the right change in your pocket to pay for them.

Bolton council, in collaboration with sQuid, the smartcard provider, has introduced contactless payment terminals to the town’s leisure centres, library and transport network. The cards are also accepted by local shops and businesses, including chippies and newsagents.

This makes the city one of the first in the UK, outside London, to embrace cashless payment technology for its transport and council facilities.

Residents can now top up their free sQuid smartcard online or in local stores before using it to pay for lowvalue items, such as a newspaper, cup of coffee or bus fare. The idea is to phase out the need to carry coins.

SQuid is in talks with other councils that are considering adopting a similar model, with retailers in the rest of the UK not far behind.

Contactless debit and credit cards were first introduced two years ago, and the technology is quickly gaining momentum.

At the end of August more than 4 million had been issued, according to the UK Cards Association — about 12 times more than in August last year.

The association estimates that there are about 11,000 terminals across the UK accepting contactless transactions, in coffee and sandwich shops such as Pret A Manger, Caffè Nero, Coffee Republic, Krispy Kreme and EAT, as well as Threshers, the wine store, Books Etc and thousands of independent retailers.

The introduction of the technology is also attracting vendors that have not traditionally accepted plastic cards such as taxis, car parks, fast-food outlets and sports stadiums.

If you have recently applied for a Barclaycard or MasterCard, or your debit or credit card has been reissued in the past few months, one of the new contactless cards, featuring a wave-like symbol, probably will have dropped on to your doormat.

Since March all new and reissued Barclays’ debit cards have been issued with its contactless Visa payWave technology. About two million cards have been sent out so far and the company hopes that most customers will have the contactless technology by the end of 2011.

New MasterCard customers will have received a PayPass card.

The cards can be used to pay for anything that costs less than £10 at participating retailers, without having to enter a PIN. Instead, the contactless card is “tapped” on to a symbol on the front of a terminal for a couple of seconds.

The aim is to cut queues — tapping a card is much quicker than entering a PIN — and to stop shoppers having to carry small change.

Many consumers, however, are concerned that such convenient technology is vulnerable to fraud — and that it is being forced on them. Visa customers, for instance, cannot deactivate their standard-issue PayWave cards.

They fear that if a contactless card is lost or stolen, a fraudster could make several transactions before they notice that it has been lost.

But Mark Bowerman, of the UK Cards Association, says that consumers should not worry too much about security. “The contactless facility isn’t a very attractive proposition for fraudsters as you can only spend a small amount.

“The cards also incorporate a counter, which means that after every few transactions the customer will be asked to enter his or her PIN to ensure that the card is still in the right hands.”

He says that banks vary in how many contactless transactions they will allow customers to make before asking for a PIN. “In some cases it’s five; some ten.”

Nonetheless, in theory, a fraudster could steal up to £100 by making ten £10 contactless transactions — and under the Banking Code, the card’s owner could be liable for up to £50 of that.

In practice, however, a customer’s bank should be alerted to unusual behaviour on a contactless card, particularly if it is rarely used, and may not hold the customer liable.

Barclays insists that its cards are secure, and that customers who have money taken from their account in fraudulent transactions will be fully refunded.

Elizabeth Holloway, a spokeswoman for the bank, says: “The risk is no different from non-contactless cards. They can still be used for non-PIN sales, for example on the internet.”

The bank says that it will continue to issue non-contactless cards — the equivalent of the old Electron cards — to customers with basic or youth bank accounts.

However, basic bank accounts are not attractive to most customers as they have no overdraft facility.

Lloyds Banking Group says that it is halfway through issuing 650,000 Halifax and Bank of Scotland-branded contactless cards and is planning to start sending the cards to Lloyds TSB customers soon. American Express and Capital One are planning to follow suit.

Getting to know you

Banks and supermarkets already have the capacity to collect information about our incomes; favourite holiday destinations; even the type of contraception we favour, based on the credit, debit and loyalty card transactions carried out daily.

Contactless cards will make it even easier for UK consumers’ behaviour to be recorded. For example, Barclaycard’s OnePulse card — a credit, contactless and Oyster card in one — enables your bank to track your every movement across the city.

Peter Bradwell, of the think-tank Demos, who specialises in personal information and privacy, says: “The way that information is used can have a real effect — changing the price of goods or what kind of a service we get offered.

“It’s important that while we recognise the many benefits that a cashless, information-rich society can bring, a sense of convenience doesn’t crowd out our ability to make informed choices about how our details are used.”