The limit on contactless card payments is set to more than double from 15 October. From this date, retailers will be able to accept contactless payments up to the £100 limits. Initial reactions vary from highly positive - a move towards a more digitalized payment future to more concerned views about the security and fraud issues.
The decision to raise the contactless payments was initiated by HM Treasury and was announced by chancellor Rishi Sunak formally in the spring Budget.
Rishi Sunak announced: "As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth."
The contactless limit initially was set at £30, but during the pandemic stroke, it was increased up to £45 in April 2020 in response to the customer demand. The opportunity to increase the limit on contactless payments has appeared by the end of the Brexit period, following the UK's withdrawal from the European Union with the European Commission putting a limit of €50 on contactless payments.
Contactless payments are an important focus
The RFID and NFC technologies that stay after contactless payments enable for payments without a physical touch of the POS device due to NFC (near- field- communication) or RFID technology. Consumers are required to bring their card or phone close to the terminal and the card information will be transmitted to POS.
COVID-19 and following it the prompted demand for safe and touch-free payments favored the further development of contactless technologies and gained the preference of the consumers.
The surveys hold in April 2020 by MasterCard showed that of 17,000 consumers in 19 countries, 82% of respondents consider contactless payments to be ‘the cleaner way to pay.’
The impact of COVID-19 highlights the necessity for contactless, seamless, and secure payments. Contactless payments rocketed during the pandemic, enabling users to avoid risks of touching surfaces and preventing the overall spread of the virus. For example, Mastercard witnessed a surge of 40% in contactless payments within the first quarter of the year 2020.
In 2020 the number of contactless payments made in the UK increased by 12% to 9.6bn payments, according to UK Finance.
Security is the main factor
The main concern for the limit increase is the security question. Raising the contactless card limit to £100 would likely make the theft of this card more attractive for fraudsters, leading to an increased number of a broad range of crimes such as wallets theft, vehicles break-ins to get hold of the cards that can be used fraudulently.
One of the main concerns for contactless cards is the necessity to enter a PIN code only after few transactions are conducted. So if under the £45 limit on contactless card transactions, the limit for transactions without PIN code request is £130, so consequently with £100, the card issuers will restrict transactions on the cumulative sum of more than £300.
The technology that enables card payment without PIN and consequently less authentication makes the cards a high-value target for fraudsters since they can easily spend 100 pounds in case the card gets in hands of fraudsters.
However, the problem can be solved. To start, the payments made via contactless cards will have protection Section 75 of the Consumer Credit Act, which covers you for single items worth £100 to £30,000 purchased via a credit card.
Some of the card issuing companies are working on enabling the customers to set limits between 20-90 pounds in order to ensure the consumers of money spend from the fraudsters side until they take actions to block the card.
Despite all concerns over security, the payments industry, and the way it manages risk has evolved since then and the contactless limits subsequently develop their own fraud protection methods. For example, the ideas of flexible and fast authentication utilizing biometrics or 2FA (two-factor authentication) are put forward to protect cards from unauthorized authentication.
Contactless payments are one of the means to create payment options for consumers. It’s a chance for retails to stay afloat in a difficult time of lockdowns and recurring pandemic crises. The health-safety intention of contactless payment methods will contribute to driving sales growth and thus save businesses from permanent damage.