Increasing UK contactless limit to £100 could mean increasing fraud

By Sunniva Kolostyak

The UK’s limit for contactless payments could be increased from £45 to £100 – meaning banks are exposing customers to greater levels of fraud, according to the industry.

Yesterday, the Financial Conduct Authority (FCA) revealed that it is looking at more than doubling the contactless limit to £100 after raising it from £30 to £45 in April last year due to the pandemic.

In a statement, the watchdog said: “Since the limit for contactless card payments was raised to £45 last April at the start of the pandemic, people are increasingly making use of contactless payments.

“It’s important that payments regulation keeps pace with consumer and merchant expectations. Recognising changing behaviour in how people pay, as part of a wider consultation, we will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100.”

The announcement also came after statistics from Barclaycard revealed that contactless technology accounted for 88.6 per cent of transactions in 2020.

According to Vince Graziani, CEO of IDEX Biometrics ASA, the desire to not use germ-carrying cash in our daily transactions is helping drive a widespread change in consumer behaviour – including those who were previously sceptical of going cashless.

“Touch-free payments have quickly become second nature for consumers to tap their card to pay for goods and services instead of using cash or punching in a PIN to minimise the spread of coronavirus,” Graziani said.

“However, with banks increasing contactless limits, they are exposing not only themselves but their consumers to greater levels of fraud. Higher levels of security during the payment authentication process are needed to combat this, and fingerprint biometric payment cards – which confidently link the user to their card – would be the ideal solution.”

Mike Peplow, CEO of Paynetics UK, added: “We’ve also seen pre-pandemic security concerns be supplanted by the immediate risk to public health and the increased usage of mobile phones. The pandemic has eliminated many of the usual barriers to digital adoption, with many consumers skipping card altogether and moving straight from cash to contactless, mobile wallets and other digital payment methods.”

Also commenting on the announcement, Brad Hyett, CEO of phos, added that even before the pandemic, cash was predicted to account for just 9 per cent of all payments by 2028.

“But given the widespread adoption of cashless technologies during the COVID-19 pandemic, these recent figures from Barclaycard and the proposed increase in the contactless limit – less than a year since the last – we now need to rethink these estimates,” he said. “Forward-thinking businesses are now investing in technology, such as mobile and software Point of Sale (POS) platforms, that enable them to receive contactless payments from customers more efficiently.”

Matt Phillips, VP, Head of Financial Services at Diebold Nixdorf UK&I, also commented: “An increase to the contactless payment limit emboldens the industry’s commitment to giving consumers choice over how they pay – whether that be by cash, card, wallet or contactless. It ensures that digital progression reflects the needs of the market.

“It represents timely action from the FCA following changing behaviours during the pandemic, and would widen the choice consumers have when carrying out transactions. It’s also crucially important to protect each payment option in its own right, for example continued access to cash, as part of the payment preference mix. Any move that improves the choice, convenience and service for customers, while enabling the ongoing evolution of the UK banking industry is a positive step, and a trend that we hope to see continue across the sector.”