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Banking trade body calls for increased contactless payment limit

UK Finance proposes an increase in the limit on spending using contactless cards

UK Finance has asked the Treasury to consider increasing the maximum amount that can be paid using contactless cards from £45 to £100.

Contactless cards, which enable users to make payments by scanning a reader when checking out, were first introduced in 2007 with a £10 spending limit.

This limit has gradually increased, and the maximum contactless payment permitted is now £45 after it was brought up from £30 in April 2020.

Although the increase was already planned, the Covid-19 pandemic and the importance of people social distancing hastened its introduction.

Banking industry trade body UK Finance has now proposed an increase to £100, according to The Times. UK Finance had not responded to questions when publishing this article.

Despite the promise of economic benefits, fears over the risk of fraud being committed through contactless cards is a factor that regulators consider. Contactless cards do not verify whether the person making the payment is the card owner. This is different to a payment method such as Apple Pay, where a fingerprint is needed, and as a result spending on contactless cards is limited.

But UK Finance said contactless fraud equates to just 2.5p in every £100 spent.

Sophisticated systems

Gareth Lodge, an analyst at Celent, said many retailers have sophisticated systems which add a level of security when contactless cards are used. “Systems will automatically ask for additional verification if certain types of products deemed as high-risk are purchased,” he said. “I expect the increase in risk is offset by the greater efficiency.”

He added that the proposed increase does not increase the level of risk substantially. “The difference between £100 and £45 in terms of risk level is not that much, compared with a new limit of, say, £1,000.”

Non-cash payments have grown at their fastest rate for a decade, and, due to Covid-19 restrictions, more people of all age groups have been forced to find different ways of making payments.

Read more about contactless payment

In October 2020, Capgemini’s World payments report revealed that 38% of people found a new payment provider during the lockdowns.

The report found that internet banking and direct account transfers have been the preferred payment method throughout the health crisis for 68% of consumer survey respondents. Contactless cards were the second most popular payment method, with 64% of people using them often.

Last month, UK Finance said that about two-thirds of debit card payments in September 2020 were contactless, which was a record high. It found that 64% of all debit card transactions were made by contactless cards, compared to 62% in the previous month.

UK Finance said September saw the proportion of contactless debit card payments hit a record high for the second month in a row.

“The value of overall contactless spending was also up by over 18% compared with the same period last year, as consumers made further use of the increased £45 contactless spending limit,” it said.

The growth in contactless payment adoption is spurring development in the industry, and banks are attempting to increase contactless limits through internal IT development. For example, BNP Paribas has a project to add biometric authentication to contactless payments, with a Visa card that stores fingerprint information. This will allow customers to make high-value payments using contactless cards.

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