Credit, Collections & Insolvency News
UK Finance has announced that the national roll-out of the new £100 spending limit for contactless card payments will begin from 15th October 2021.
The decision to raise the contactless limit from £45 to £100 was made by HM Treasury and the Financial Conduct Authority following a public consultation and in discussion with both the retail and banking sectors. It follows on from the successful increase in the limit from £30 to £45 in April 2020.
From 15th October 2021, consumers will start to see retailers accepting contactless payments up to the new £100 limit, which will give customers more flexibility when shopping in store. Given the number of terminals which will need to be updated to accept the new limit, it will take some time to be introduced across all retailers. To check if a retailer has updated to the new limit, customers should either ask in store or follow the prompts on the card payment machine when paying.
For consumers spending more than £100 there are many ways to pay, for example through Chip & PIN, cash and alternatives such as mobile payments like Apple Pay or Google Pay which do not have an upper limit when authenticated through biometric technologies like fingerprint or facial recognition.
David Postings, Chief Executive of UK Finance, said “Contactless payment has proved very popular with consumers and an increasing number of transactions are being made using contactless technology. The increase in the limit to £100 will allow people to pay for higher value transactions like their weekly shop or filling up their car with fuel. The payments industry has worked hard to put in place the infrastructure to enable retailers to update their payments systems so they can start to offer their customers this new higher limit.”
The Chancellor Rishi Sunak said “Increasing the contactless limit will make it easier than ever to pay safely and securely – whether that’s at the local shops, or your favourite pub and restaurant. As people get back to the high street, millions of payments will made be simpler, providing a welcome boost for retailers and shoppers.”
In response to the announcement Holly Andrews, Managing Director at KIS Finance and Personal Finance Expert said “While this may be welcomed news for highstreet retailers, there are concerns over how this may affect those who are already struggling with debt issues after the pandemic.”
“Contactless payments make spending money incredibly easy. Without the need to enter a PIN number, it takes mere seconds for transactions to go through in shops. With the ability for consumers to now do this for purchases up to £100, spending may now become even more difficult to control for many.”
“Debt is a huge problem in the UK and it has only been made worse by the pandemic. Now, those who struggle to control their spending habits and regularly slip into their overdrafts or use credit cards for every day spending will soon have the ability, and temptation, to make larger purchases with even more ease.”
“When you have to stop for a moment to enter your PIN number, or when you enter you card details while shopping online, this gives you a moment to stop and think about what you’re doing. Sometimes this is all it takes to curb impulse purchases. With this barrier now being removed for even bigger purchases, I am concerned at how spending will soon spiral out of control for those who are already in debt due to over-spending.”
“Banks need to give their customers the freedom to set their own contactless limits if they want to. Giving £100 limits to those who are already in their overdrafts or regularly relying on credit cards could be hugely damaging.”