£100 Contactless Card Limit Set to be Lifted
Millions of consumers can expect a major shift in how they manage their payments as the £100 contactless card limit is set to be lifted. A new regulatory change will allow individuals to set their own contactless payment limits—or even opt for no limit at all—starting March.
Details of the New Payment Flexibility
– Custom Limits: Banks and card providers will now have the flexibility to establish maximum single payment amounts without requiring a four-digit PIN.
– Consumer Control: The Financial Conduct Authority (FCA) encourages financial institutions to empower their customers by enabling them to set their own limits or disable contactless payments entirely.
– Historical Context: Contactless payments launched in 2007 with a set limit of £10, gradually increasing to £100 in October 2021. The increments were as follows:
– £15 in 2010
– £20 in 2012
– £30 in 2015
– £45 in 2020 (during the Covid pandemic)
Payments Via Smartphone
Interestingly, smartphone users can already make payments exceeding the £100 limit without needing a PIN, thanks to built-in security features like thumbprints and face ID. However, concerns are rising about the potential for increased fraud, as thieves may find high-value, tap-and-go payments more enticing.
Safeguards Against Fraud
To mitigate the risk, several protections are in place:
– Consumers will receive alerts prompting them to enter a PIN after a series of consecutive contactless transactions.
– According to David Geale, executive director of payments and digital finance at the FCA, consumers are still entitled to refunds if fraudulent transactions occur.
The Balance of Convenience and Caution
Contactless is people’s favoured way to pay, noted Geale during a recent appearance on the BBC’s Today programme. He emphasized the need for banks to adapt their limits based on individual customer risk profiles while encouraging flexibility for customers to define their own limits.
Countries like Canada, Australia, and New Zealand already allow the payment industry to dictate contactless card limits.
Consumer Sentiment on Changing Limits
Despite the potential for increased flexibility, there’s hesitance among consumers. A recent FCA survey indicated that 78% of respondents wanted to maintain the current £100 limit. While the convenience of unlimited contactless payments could streamline transactions, financial experts warn it may also lead to impulsive spending, particularly with credit cards.
Risks for Vulnerable Individuals
Financial abuse charities have raised concerns about the implications of unlimited payment limits. They argue that such a system could facilitate abusers draining their victims’ bank accounts without oversight. The increased shift towards a cashless society could disempower survivors, whose diligent record-keeping through cash transactions serves as protection against financial exploitation.
Access to Cash Amidst Change
As bank branches continue to close, efforts are underway to ensure vulnerable customers continue to have access to cash. The initiative includes the establishment of shared banking hubs, with the recent opening of the 200th hub in Billericay, Essex.
Conclusion
The upcoming changes to contactless payment limits highlight an ongoing evolution in how we handle our finances. While the allowance for individual limits and increased flexibility could streamline transactions, it is imperative to remain vigilant about the potential downsides—particularly concerning consumer spending habits and the protection of vulnerable populations. As we move forward, careful consideration will be vital in balancing convenience with security.