Because they drive a coach and horses through the whole point of the added security of chip and pin, which might not be a perfect system (what is?) but has driven down 'cardholder present' card fraud exponentially.Thieves can and do go on enthusiastic spending sprees, often of fags and booze, with acquired cards, sometimes for hours after a theft/loss has been reported. The Poor Joe with a credit card who has a balance that doesn't get repaid in full every month ends up paying for all this.
This isn't entirely true.
Your bank is likely to stop any fraud if they do go on a "spending spree" - their software is often good at detecting unusual activity (it stopped me only last week when I used a (genuine) contactless payment in Cardiff, which it deemed unusual). A thief cannot go on an enthusiastic spending spree above the £30 spending limit per shop, which somewhat limits their aspirations to a few packets of cigarettes. As has been said, the reality is that fraud is considerably lower with contactless cards; even though it's easier to access the funds, the opportunities for actually spending them are considerably more limited.
Provided you report your card stolen as soon as you realise, you won't be liable for any fraudulent charges. This is the same as with Chip&Pin.
Banks are also working on something that is akin to "secure contactless". There's a patent pending for a
contactless card that requires your fingerprint, for example.
Potential future security enhancements aside, contactless is widely accepted as a payment method in low value transactions, and would be used on buses. In fact, bus fares are a
perfect fit for contactless payment cards. For me, it would certainly encourage me to use the bus by removing one of my big barriers - namely I often don't have the "exact change" to make a £1.85 fare!