The payments industry has moved quickly in recent years. You don’t need to be that old to remember things like getting a cashier to print a cheque for signature. Or smaller retailers using manual imprint machines to get your card details. Now, a generation of people are getting their first salaries. But never seeing a physical penny of it because they can operate without cash.
The limit was extended during the pandemic. Concerns about the virus spreading via surfaces led to efforts to reduce contacts. Whether it was the new £45 limit, or a fear of the virus; there was a 12% rise in the number of contactless payments in 2020. Nearly 10 billion contactless transactions taking place despite many places closing for significant parts of the year.
When will the change take place?
The contactless limit has risen to £100 on 15th October. From the early days when contactless was limited to those small purchases, for many people the vast bulk of their in-person shopping will be completed without inserting a card or entering a PIN. For many people, this may not make any real difference. Other contactless payment methods, like Apple Pay or Google Pay have not had payment limits because they authenticate the user through device security.
Those most at risk from the October rise are probably banks, who are liable for any fraudulent use of contactless. However, such costs have actually reduced in recent years. Fraud accounts for only around 2% of all transactions, and most banks employ sophisticated measures to check on use. With suspect changes in spending behaviour (most thieves are unlikely to follow your morning coffee or grocery shopping habits) triggering requests for a PIN. Even if not, there is a limit on contactless spending. Attempts to spend more than £300 in a short period of time will also trigger a PIN request.
But while customers will benefit from the added convenience, retailers are the ones likely to benefit most of all. The evidence so far has been that the convenience of contactless increases trade. Customers are more likely to use businesses that offer contactless, and more likely to spend more when the checkout experience is easier. However, businesses need to make sure they are ready to benefit. The increase takes effect on 15 October, but that might require work to ensure that payment systems are ready, so customers can take advantage of the increase from the very first day.
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