SOUTH Korea has taken a significant step towards becoming a cash-free society with a trial designed to do away with small change. But the majority of British consumers are nervous of new payment methods – even though their fears may be groundless.

One in five UK card payments is now contactless, totalling more than £2.3 billion a month, and global law firm Paul Hastings predicts our non-cash payments will reach £1.44 trillion by 2026, with a staggering 19 billion contactless transactions a year.

Banks routinely issue contactless debit and credit cards, and mobile phone and other companies offer digital wallet systems, such as Paym, Pingit, Android Pay and Apple Pay, which transfer cash by connecting bank accounts to handsets.

Yet according to Paul Hastings three-quarters of Britons are worried about the security of their data or the potential for something to go wrong.

Ben Regnard-Weinrabe, a banking and payments partner at the firm, said: “Many British consumers have yet to make the most of the variety of new payment methods at their fingertips, with concerns around fraud and theft appearing to be an issue, even though the same concerns may often apply to traditional payment methods.”

The citizens of South Korea have fewer misgivings. According to a survey by the Bank of Korea, nearly two-thirds no longer carry coins and half support plans for a coinless society.

The country has started a trial that allows shoppers paying with notes at selected stores to have the change added to a pre-paid spending card. If it is a success, the bank says it will be extended to allow change to be transferred directly into bank accounts, freeing people entirely from the need to carry coins.

Cha Hyeon-jin, one of the officials behind the scheme, said there was a “good chance” this could eventually lead to a totally cashless society.

Perhaps surprisingly, it is older consumers in the UK who are often most at ease with new payment methods.

According to financial services provider Saga half of over-50s use contactless cards when doing the weekly shop, almost a third enjoy the convenience when paying for a coffee and one in ten use them to buy their newspapers.

A third of this age group like not having to carry cash and a quarter cite the fact that it means they do not have to remember a PIN. A similar proportion say going contactless speeds things up when travelling by underground or taxi and using toll roads.

But not all are comfortable with contactless payments. Seven out of ten worry about security and almost half believe that cards’ easy availability will increase pickpocketing.

In fact, used sensibly, paying this way should be no riskier than any other method. The UK Cards Association said that fraud on contactless cards and mobile devices accounts for less than one per cent of all card fraud, with losses equivalent to just 3.1p in every £100 spent.

Contactless debit or credit cards allow users to spend up to £30 without entering a PIN. When the card is tapped against the terminal it picks up a signal from the chip and processes the transaction.

To protect against fraud, contactless cards include the same secure technology as the traditional chip and PIN type, and there has never been a confirmed report of money being stolen from a UK contactless card that was still in the holder’s possession.

Standing near a terminal does not make it possible to be charged for someone else’s purchase and double charging cannot happen either, as terminals are programmed to take just one payment per transaction and to reject payment if two cards are in range.

To protect against unauthorised use if a card is stolen, banks limit the number of contactless purchases that can be made in quick succession. Which? found a thief could on average only make two to four before being asked for a PIN.

If your card is lost or stolen, the rules are the same as for other card transactions. Unless the provider can prove you were negligent or party to the fraud, it must refund you in full.

To prevent problems, treat your card with the same care as you would any other. Keep it within sight at all times – if someone takes it away to process a payment they could use a skimming device to copy the data and make a clone.

Always ask for a receipt so you can keep track of spending, and check statements regularly for unusual transactions. Report anything you do not recognise to the provider right away.

Phone-based apps such as Android Pay and Apple Pay work in the same way as contactless cards. After downloading the relevant app and linking the device to a debit or credit card, you pay by holding it against a terminal.

To protect users, devices and terminals exchange a code number in place of actual account details. Android Pay requires users to have a screen lock set up and you can choose between entering a PIN, password, pattern or fingerprint. Apple Pay requires a fingerprint or password to authorise transactions.

Systems such as Paym and Pingit allow you to send money to businesses, friends and family using just their phone number, doing away with the need to exchange account details.

Mr Regnard-Weinrabe said: “The security challenges faced by new payments providers are often no different to those affecting traditional providers.

“However, the benefits of using new payment methods are clear, and many consumers and retailers across the UK are making the most of their simplicity, safety and convenience.”