From the 15th of October 2021, the spending limit for contactless payments in the UK will rise to £100. As with previous increases to the spending limit, some consumers have welcomed the news while others have expressed concern about the potential for fraud. But with contactless payments accounting for 90% of all UK card payments in 2020, it’s clear that consumers have confidence in contactless payment methods.
Are fraud fears justified?
When contactless payments first launched in the UK back in 2007, many consumers approached them with suspicion. The ability to spend money using bank cards without entering a PIN seemed like a recipe for fraud. To limit consumers’ exposure to potential fraud, a £10 spending limit was implemented. However, those fears never materialised. While contactless card fraud has increased as spending limits have risen,contactless fraud still accounts for less than half of all card fraud. Furthermore, consumer protection laws ensure that fraudulent transactions don’t leave consumers out of pocket.
With every increase of the contactless spending limit, the frequency of contactless payments processed by retailers also increases. Fraudulent transactions accounted for just 2.5p of every £100 spent by consumers in 2019, but this figure dropped to 1.18p in 2020.
What does the increase mean for retailers?
Contactless payments are now ubiquitous among high street businesses, and consumers expect to have the option to pay using contactless methods with most companies. In addition, the pandemic has accelerated the transition away from cash in favour of digital wallets and contactless card payments, making contactless the most popular way of making in-store payments. Therefore, retailers have welcomed news of the new £100 limit, especially as many of them continue to recover from the economic damage covid has wreaked upon the sector.
As contactless payments’ popularity continues to grow, banks are continually looking for ways they can improve security. Digital wallets like Apple Pay can already be used for payments above the £40 spending limit, thanks to their use of biometric authentication via a fingerprint. NatWest is also working on contactless cards that incorporate a fingerprint scanner, with other major banks looking to follow suit.
Frictionless payment processing benefits businesses and consumers alike. We know from experience that any increase in the contactless spending limit will lead to an increase in the frequency of contactless payments for retailers. MultiPay offers bespoke card payment solutions with competitive and low credit card processing rates and merchant accounts that enable your business to take full advantage of the opportunities that the increased contactless limit will bring.