£100 Contactless Card Limit to Be Lifted
Millions of consumers will soon have the option to set their own contactless card payment limits or even choose to have no limit at all. This shift comes as a new regulation from the Financial Conduct Authority (FCA) takes effect in March, allowing banks and card providers to establish maximum—or even unlimited—single payment amounts without needing to enter a four-digit PIN.
Key Changes to Contactless Card Payments
– New Flexibility: The FCA is encouraging banks to allow cardholders to customize their individual payment limits or disable contactless payments entirely. Some banks already provide this functionality.
– Gradual Increase: Since the introduction of contactless payments in 2007, the transaction limit has gradually risen from £10 to £100. This increase includes jumps to £45 during the Covid pandemic in 2020 and £100 in October 2021.
– Smartphone Payments: Currently, payments made via smartphones can exceed the £100 limit without a PIN, thanks to enhanced security features like thumbprints and facial recognition.
Consumer Concerns and Protections
While the prospect of lifting the £100 contactless card limit offers convenience, it also raises concerns about potential risks:
– Security Risks: High-value payments made with a simple tap could make cards more appealing to thieves and fraudsters.
– Fraud Protections: The FCA has implemented measures, such as prompting users to enter a PIN after a series of consecutive contactless transactions. According to David Geale, an FCA executive director, consumers would be reimbursed for any losses incurred through fraud.
Insights from Banking Experts
On the BBC’s Today programme, Mr. Geale emphasized the importance of flexibility in contactless payments:
– Customer-Centric Approach: He stated that banks and payment firms should tailor limits based on their customers’ profiles.
– International Comparisons: Countries like Canada, Australia, and New Zealand have successfully allowed industry players to set contactless card limits, indicating a potential path forward for the UK.
Public Opinion on Limit Changes
Despite the eagerness for change from regulatory bodies, the FCA’s recent survey revealed that:
– Consumer Sentiment: A significant 78% of respondents expressed their desire to maintain the current £100 limit, indicating a reluctance for more freedom in spending.
Risks of Unlimited Spending
– Financial Implications: Increased convenience may encourage impulsive spending, particularly with credit cards, potentially leading to unmanageable debt.
– Concern for Vulnerable Customers: Financial abuse charities warn that unlimited contactless spending could allow abusers to exploit survivors’ accounts without checks, complicating efforts to combat financial control.
Access to Cash Initiatives
As more bank branches close, initiatives like shared banking hubs are emerging to ensure customers retain access to cash. Notably, Cash Access UK announced the opening of its 200th banking hub in Billericay, Essex, highlighting ongoing efforts to secure cash access across the UK.
In conclusion, while the lifting of the £100 contactless card limit could revolutionize payment convenience, it is essential to remain vigilant about the accompanying risks. Ongoing regulatory guidance and consumer feedback will be crucial in shaping the future of contactless payments to ensure that security and user autonomy remain paramount.