UK contactless payment limit more than doubled

The UK has lifted the limit on contactless card payments, with consumers now able to spend £100 in a single payment after the threshold was almost doubled.

At the same time, users will be able to spend £300 in total before a PIN is requested, which is an increase from £130.

The move, which was expected, follows the increased use of contactless cards during the Covid-19 pandemic. Banking industry trade body UK Finance recently asked HM Treasury to consider increasing the maximum.

Sheldon Mills, executive director, consumers and competition at finance services regulator the Financial Conduct Authority (FCA), said the increase in use of contactless cards during the pandemic was reason to increase the spending limit. “During the pandemic, more people have been using contactless payments,” he said. “We are changing our rules to help the industry continue to respond to the changing ways in which people prefer to pay.”

Contactless cards were first introduced in 2007 with a £10 spending limit which has increased gradually. It moved from £30 to £45 last April during the early stages of the pandemic, as consumers avoided making physical contact while spending.

The FCA’s approval means the finance industry can move to the new spending threshold. “Increasing the regulatory limits allows industry to raise the contactless limit in the future to meet the evolving expectations of customers and merchants for fast but secure ways to pay,” said Mills. “When making any change, it is important that the industry continues to ensure the right protections are in place to keep payments safe and secure.”

Contactless payments accounted for 88.6% of total card payments in 2020 as restrictions on contact-based payments drove people to contactless, according to data from Barclaycard.

The decision to increase the limit on contactless spend to £45 drove the average value of contactless payments by 29% during 2020 to £12.38, compared with £9.60 in 2019, said Barclaycard. It found that users made an average of 141 payments using contactless in 2020, worth an average of £1,640 in total.

Contacless cards require spending limits because unlike other contactless payments such as Apple Pay, for which a fingerprint is needed, contactless cards do not verify whether the person making the payment is the card owner.

According to UK Finance, contactless-only fraud equates to 2.5p in every £100 spent. But many users want reassurance.

Research from IT supplier TietoEVRY found that 80% of UK consumers want a biometric security factor on their next payment card, with more than half of them willing to pay for it.

Steve Warner, UK sales director at TietoEVRY, said: “With the new limit of £100 per transaction in the UK, it becomes possible for thieves to spend significant sums of money on unprotected contactless cards, even if theft is reported quickly. This is a real concern, and card-issuing banks must act now to ensure contactless transactions remain safe and bolster consumer confidence.”

The economic benefits of the technology are significant, according to UBS bank. It said biometric payment cards with built-in fingerprint sensors could add $5bn to revenue in the global banking sector by 2026.

Michel Roig, senior vice-president and head of business line payments and access at Fingerprint Cards, said banks and consumers will be worried about fraud. “Banks have been piloting biometric contactless cards that have a fingerprint sensor in them, meaning only the right cardholder can tap and pay,” he said. “No need to worry about lost or stolen card fraud, no more touching PIN pads, and payment limits could even be scrapped completely to simplify payments in-store.”

Last June, French bank BNP Paribas brought forward a project to add biometric authentication to contactless payments. While customers will still be able to make contactless payments up to the spending limit without a fingerprint, they will also be able to make higher-value contactless payments using the new card.

In the Nordics, OP Financial Group, working with service provider TietoEVRY, is testing biometric payment cards that combine contactless and fingerprint verification. It said more than 60% of payment terminal transactions made by its customers using OP cards were contactless, but it wanted to give added security so users can make higher-value payments.