From October 15th, 2021 consumers will now be allowed to make single contactless payments up to £100.
HM Treasury and The Financial Conduct Authority (FCA) made the decision after discussion and consultation with both the banking and retail sector. It comes after the initial increase to £45 from £30 which took place during the global pandemic which aimed to help shoppers reduce their usage of handling cash and limit physical interaction with retail staff members to reduce Covid outbreaks.
Back in 2007, the limit for contactless transactions was £10. Now in 2021 this has multiplied 10x this amount. Individuals that run companies in the financial and tech sector argue that the progression for contactless payments has been slow and consumers have mixed feelings, with some wanting faster progression and a small minority still mistrusting of the security of contactless.
A welcoming move?
Andries Smit is the CEO and founder of Upside Savings that allows apps to offer frictionless cashback to their customers says, ” the increased contactless limit is great news for retail. I only wish it was done earlier so that consumers and the retail industry could have benefitted from this during the lockdowns. People want contactless, frictionless payments. People don’t want cards, no bank cards, no loyalty cards. Contactless everything is the way to go and is almost certainly the future of payment.”
Chancellor Rishi Sunak also welcomed the increase and hoped as the economy begins to recover and businesses and the high street return to normal anything that helps consumers make purchases quicker and with less hassle is a plus. “Increasing the contactless limit will make it easier than ever to pay safely and securely – whether that’s at the local shops, or your favourite pub and restaurant. As people get back to the high street, millions of payments will be made simpler, providing a welcome boost for retailers and shoppers”.
There is a concern there will be an increase in fraud and theft of cards in which criminals will be able to make more stolen purchases now the limit has increased. While technology isn’t perfect many banks rely on user prompted acknowledgements to protect from scams. Those from vulnerable groups which include the elderly, disabled, and the less tech-savvy can still purchase items using chip and pin and still use cash depending on the business. One of the FCA’s priorities is to make sure consumers and small businesses can still access cash as for these groups cash transactions are still heavily relied upon. The FCA does not believe this new contactless limit will impact consumers’ and businesses ability to do so.
For consumers that are spending over £100, Chip and Pin still have no set limit and apps such as Apple Pay and Google Pay also have no limit. Merchants however can set their own restrictions, with some UK supermarkets setting £250 limits on Apple Pay.
There is no denying that the pandemic has changed consumers’ purchasing habits. With the rise of online shopping, increasing use of contactless payments and the use of mobile payment apps such as Apple Pay and Goggle Pay, increasing the limit of contactless payments seems only natural and a must if the government, companies, and retailers want to keep in-line with how consumers spend money.
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