Wednesday, October 27, 2021

What is the new limit for contactless payments and how secure is it?

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UK consumers will be able to pay up to £ 100 contactless in shops, cafes and bars from Friday October 15, a move aimed at simplifying transactions but has caused concern in some circles.

The decision to raise the cap from £ 45 to £ 100 in order to depart from EU-wide restrictions was taken by the Treasury Department and the Financial Conduct Authority following public consultation and discussions with banks and the retail sector.

The limit was last raised from £ 30 to £ 45 in April 2020.

“Contactless payments have become very popular with consumers and an increasing number of transactions are being processed using contactless technology,” said David Postings, CEO of UK Finance.

“Raising the limit to £ 100 will allow people to pay for higher value transactions like their weekly grocery shopping or fueling their car,” he said, somewhat optimistically on the latter point.

“The payments industry has worked hard to put the infrastructure in place so that retailers can update their payment systems so they can offer this new higher limit to their customers.”

Equally enthusiastic was Chancellor Rishi Sunak, who hoped to spur in-store spending as the UK continues its stuttering economic recovery from the coronavirus pandemic.

“Raising the contactless limit will make it easier than ever to pay safely and securely – be it in local stores or your favorite pub and restaurant,” he said.

“When people get back on the high street, millions of payments will be easier, which will give retailers and shoppers a welcome boost.”

Buyers are warned that while all banks should process payments up to £ 100 as of Friday, not all businesses will be able to offer the service immediately as the terminals will have to be reprogrammed individually, which can take several weeks or even months before the new limit is recognized as a standard.

Of course, any amount can still be paid off with the very little effort of Chip and PIN as well as Apple Pay and Google Pay, both of which do not set an upper limit.

The first contactless credit and debit cards were introduced in the UK in September 2007. At that point, payments of no more than £ 10 were possible and became an instant hit.

There are an estimated 135 million contactless cards in circulation in the UK in 2021, making around 9.6 billion transactions each year, with one in four payments being processed through technology in 2020, continuing the phasing out of physical currency after centuries of use will .

While other countries, including Canada, Australia, and Singapore, have successfully raised their contactless limits above the same amount, some financial advisors fear that doing so will encourage thieves and tempt people to spend too much and lose track of their balance.

Laura Suter, Head of Personal Finance at investment firm AJ Bell, recently outlined these objections by saying, “First, it’s a thief’s dream because if your card is lost or stolen, they can take a lot more of your money with every transaction will.

“Second, there is a risk that those who are in debt will continue to get into debt. The simpler a card transaction, the less the consumer actively thinks about how much they are spending, which means that it is easier to collect larger bills on a credit card. “

Although card fraud is a huge problem for many, UK Finance figures show that only £ 7.6 million were stolen from contactless cards and phones in the first six months of 2021, meaning £ 66.5 billion during that time Pounds spent on the same technology, only 1p out of £ 100 can be traced back to fraud, suggesting that scammers are looking for targets elsewhere.

This idea was corroborated by data from the same agency on wire transfer fraud, which found $ 355.3 million in the first six months of the year.

It’s also comforting to note that banks require contactless users to periodically re-enter their PIN after a certain number of purchases, meaning that a thief in possession of a stolen card may only be able to use it once or twice without actually using it know number before it becomes inaccessible.

Prior to the launch on Friday, Andrew Cregan, Fiscal Adviser to the British Retail Consortium, advised consumers “to be extra careful when making contactless payments….

He also suggested that customers who do not trust themselves not to spend too much or otherwise feel uncomfortable contacting your bank.

Currently, Lloyds, Halifax and Bank of Scotland customers can choose their own debit card limits between £ 30 and £ 95 in increments of £ 5 through these banks’ mobile apps, with credit card options due shortly.

“We listened to customer feedback to introduce this option, which will allow them to make the most of the £ 100 limit in a way that is convenient for them,” said Philip Robinson, Lloyds director of personal checking, payments and fraud and financial crime.

Nationwide and Santander are reportedly considering offering a similar service, but HSBC, Barclays and Monzo are not currently offering personalized limits.

Many banks also allow their customers to opt out of contactless payment technology entirely, and some provide account holders with a contactless card upon request.

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