The UK financial regulator has declared a small revolution in terms of contactless card payment limits, starting from March 19 next year. This change scrapes the existing £100 cap. Until very recently, consumers could spend any amount they wanted without having to enter their PIN code. The placing under a new Royal Assent decision follows a consultation cursive launch earlier this year, designed at changing demand payment guidance to keep up with developing customer behaviors.
Contactless payments have become hugely popular in the UK since they were introduced in 2007. While they began with a modest £10 cap, their journey since has grown remarkably. Over the years, this limit has seen incremental increases: to £15 in 2010, £20 in 2012, and £30 in 2015. The COVID-19 pandemic accelerated this development. In response to this, it increased the price to £45 in 2020 and subsequently increased the price again to £100 in October 2021. Per the new rules, consumers would still face a total cap of £300. In addition, they will encounter a limit of five “taps” before having to input their PIN.
David Geale, the executive director of payments and digital finance at the Financial Conduct Authority (FCA), emphasized the importance of this change, stating,
“Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers.”
Kate Nicholls, the new chair of the trade body UKHospitality, welcomed today’s announcement as a significant improvement on earlier planned changes. Further, she made clear that raising the cap would do wonders for her union’s membership. It would help all other high street businesses in the process. Nicholls continued by claiming that raising limits would improve consumer experiences.
“Contactless has increasingly become the preferred payment method of choice for many people, and lifting the limit can mean quicker and easier experiences for consumers. While many people still prefer to use cash or chip and pin, this change adds much-needed flexibility for providers and consumers.” – Kate Nicholls
It hasn’t all been smooth sailing. Richard Whittle, an economist at the University of Salford, raised concerns that enhancing convenience could lead to unintended consequences for consumers. Above all, he cautioned that people should think hard about what they’re buying. If not, they risk purchasing products they have no intention of using or enjoying.
“If this ease of payment leads to consumers spending without thinking, they may be more likely to buy what they don’t really want or need. This could be a particular issue with credit cards, when people are spending borrowed money and accumulating debt.” – Richard Whittle