Government raises contactless limit

The changes, being set out in today’s (3 March) Budget, will see the single contactless payment limit raised from £45 to £100.

The government said the increase has been made possible by the UK’s exit from the European Union, which means it is no longer bound by EU rules on the maximum limit for contactless payment, which is currently set at £45.

The contactless card payment limit was raised from £30 to £45 on 1 April as part of measures to combat the spread of coronavirus.

Chancellor, Rishi Sunak, said: “As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth.”

In response, Pete Wickes, general manager, EMEA, Worldpay from FIS, said: “Increasing the contactless limit for the second time in a year could have a positive impact for many consumers, who can now use their preferred method of payment for larger purchases. Mobile contactless payments – which have higher limits and biometric security – are the fastest growing payment method at point of sale and will account for £125bn worth of sales on the UK high street by 2024.

“It is vital that shops and businesses have sufficient time to implement the changes given the current extraordinary operating conditions. Some consumers will also need time to adjust. Our research reveals that around 40% of UK consumers still have lingering doubts about contactless security. Education will be key.”

Dean Wallace, director of consumer payments modernisation at ACI, said the move is good news. However, he pointed out: “Ideally, the increase would be introduced cautiously, with trials and market testing due the inherent risk of fraud with contactless. For example, if you had four cards on you, that’s £400 worth of payments without a PIN, rather than the current £180, which means your leather wallet is now worth a lot more to a thief than before the limit rise.

“This means banks need to make sure their fraud protection measures are up to scratch. And there needs to be greater education about the risk of making a payment which many now view as a ‘tap and don’t think’ action.”

He added: “However, there is good news too. The move to broader contactless reach paves the way for increased innovation in payments and the broader adoption of technologies such as digital wallets and Request 2 Pay, which not only offer enhanced customer experience but also include more security such as biometric authentication.”