The contactless limit is increasing to £100 - are you ready?

The contactless limit is increasing to £100 - are you ready?

UK consumers will be able to spend up to £100 using contactless card payments from October 15 2021, more than double the current limit.

The major change is the second increase to contactless card spending limits in less than two years - and bank experts say that it will allow people to pay, without the need to enter a PIN, when filling up the car with fuel or during weekly food shopping trips.

Contactless spending is now higher than ever, with nearly two-thirds of all debit card transactions made with tap-and-go technology.

So, are you ready for the next contactless revolution?

Why is the limit on contactless card payments increasing?

First, the basics. Making a contactless payment involves paying for something by gently tapping a contactless device (usually a bank card) over a reader, which accepts your payment.

The system allows you to make payments quickly, rather than entering your PIN.

When contactless card payments were introduced back in 2007, the transaction limit was originally set at just £10 and was meant for small purchases like newspapers and quick lunches. This limit was raised to £20 in 2012, then up to £30 in 2015.

It then increased to £45 at the start of the coronavirus pandemic in April 2020, with people being encouraged to use contactless methods as often as possible to reduce close contact between workers and customers.

The increased limit proved popular and relatively safe compared to other transaction methods, so in March 2021 Treasury and Financial Conduct Authority officials made the decision to increase the limit to £100 to keep up with how people now prefer to pay, and help support the UK's recovery from the pandemic.

Shoppers should start to see retailers accepting contactless payments up to £100 from October 15, but all terminals need to be updated to accept the new limit, so it could take a little longer to filter through to every point of sale in the UK.

What do the experts say?

Banking industry body UK Finance claims that the new increase gives people more flexibility when shopping in-store with credit and debit cards.

UK Finance chief executive David Postings said: "Contactless payment has proved very popular with consumers and an increasing number of transactions are being made using contactless technology.

The increase in the limit to £100 will allow people to pay for higher-value transactions like their weekly shop or filling up their car with fuel."

However, behavioural science experts believe that raising the contactless card limit again could potentially lead to reckless spending and higher levels of debt.

Contactless payments are now so quick and simple that we often don't have the opportunity to stop and ask ourselves whether we really want or need what we’re about to buy.

Consumer debt specialists also argue that the simpler that authorities and companies make the transaction process, the less time we have to actively think about how much we are spending, meaning it could be easier to rack up larger bills - especially on a credit card.

Will larger contactless payments be safe from fraud?

Contactless transactions make it quick and easy to buy things. But the limit rise could put consumers at an increased risk of fraud if the card is stolen, as criminals may be able to spend up to £300 without facing a security check.

Rates of contactless card fraud have remained low, with losses totalling £16 million in 2020, down from £20.6 million in 2019 (this was in part because of reduced opportunities for criminals due to lockdown restrictions). Contactless offences currently make up just 2.8% of overall card fraud.

It has become a widely accepted way to pay safely - but some industry experts fear losses could rise when the contactless limit is increased.

Under the current £45 limit on contactless card transactions, you can make five consecutive payments totalling £130 before you're asked to enter a PIN.

Once the new limit is introduced in October, you will still be able to make up to five transactions, or spend a maximum of £300 before you are asked for a PIN.

The higher limit means that if your card is stolen, thieves may be able to spend more of your money before a PIN is required.

This shouldn’t be a cause for concern. If you contact your bank as soon as possible after you think it’s been stolen, they should refund any money that has been fraudulently spent on your card, and the Financial Conduct Authority says that it will take action if banks allow the cumulative transaction limit to be breached.

Contactless transactions don't just apply to cards...

As well as contactless cards, the same technology is now widely used on other devices such as smartphones and smartwatches, which use the Google Pay, Apple Pay, Samsung Pay and Fitbit Pay systems.

These networks allow you to store your credit and debit card details in a secure mobile wallet and use your phone or watch like a card, tapping it on a contactless reader to pay.

However, it is actually possible to make contactless payments over £100 using the likes of Google Pay or Apple Pay, as there is no official cap, with the contactless limit set by the individual retailer.

How to avoid contactless card fraud

There are several ways you can help to limit the risk of becoming a victim of contactless card fraud.

• Try to make sure that your card isn’t visible
  Leaving your card unattended in a public place could allow criminals a chance to strike. If given the opportunity, fraudsters could run it through a card reading device to clone your card details. Avoid leaving payment cards on tables, in open bags, in your back pocket or any other place it could be easily spotted.
• Don't let your card out of your sight
  When paying by contactless card, the transaction should always be carried out on a card reader in front of you, for similar reasons to those mentioned above. If you are told that's not possible, then you should challenge staff and not let the card out of your sight.
• Ask for a receipt
  Asking for a paper receipt when making a contactless payment makes it easier to keep track of your spending, and you can also check that you haven't been overcharged.
• Check your bank statements
  It’s always a great idea to check your bank statements as often as you can to look out for any unusual transactions. Using a mobile banking app makes the process of checking regularly even easier.

Do I have to use a contactless card?

If you feel unsure about increasing the contactless limit to £100 and would prefer to opt out of the contactless system, reverting to the chip and PIN method, contact your bank immediately. Opting out of using contactless cards really depends on who you bank with. If you aren’t offered the choice to opt out, it could be worth comparing cards and accounts to find a banking provider that better suits your preferences.

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