Sunday , October 25, 2020

In Response to Infection Concerns, the U.K. Raises Its Contactless Payment Cap by 50%

With much of the world locked down in combatting the novel coronavirus pandemic, a financial trade group in the United Kingdom said Tuesday the country would increase the spending limit on contactless transactions by 50% effective April 1. The move will allow consumers to pay without touching a keypad or terminal on amounts up to £45 (about $53), the group said

Other countries have recently put similar moves into effect, including the Netherlands, Germany, Norway, Saudi Arabia, Egypt, Poland, and Turkey, according to the financial newswire Finextra.

The new U.K. contactless payment limit, however, may take some time to implement nationwide, cautioned the British Retail Consortium, a London-based national trade group for merchants. Retailers already dealing with crowded stores may not be able to make the change until some time after April 1, the group said. 

Under the limit, card users can perform a transaction by waving or tapping a card and without entering a PIN. In 2015, the United Kingdom raised its contactless cap from £20 to £30.

“The last contactless limit increase to £30 took two years to implement but, given the extraordinary circumstances we face today, this new £45 limit will be rolled-out from next week,” said Andrew Cregan, head of payments policy for the BRC, in a statement. “Some shops will take longer to make the necessary changes, given the strain they’re under.” Cregan added that wallets like Apple Pay allow contactless transactions at higher amounts.

UK Finance stressed its decision to raise the contactless limit came after consultation with retail representatives. Besides reducing the need to touch POS equipment, the move will also reduce interactions with other customers, the group said. “This will give more people the choice to opt for the speed and convenience of purchasing goods using their contactless card, helping to cut queues at the checkout,” said Stephen Jones, UK Finance’s chief executive, according to Metro.co.uk, an online news service of Associated Newspapers Ltd.

Major acquirers are lining up to support the new contactless cap. Barclaycard, whose technology supports more than 150,000 terminals across the country, said, “Deployment will be prioritised for retailers in key sectors, including grocery & supermarket stores, bakeries, pharmacies, and petrol service stations,” according to a news release Tuesday. “Barclaycard will be supporting the deployment of the higher contactless limit to other merchants in due course.”

Some sources cautioned the move to implement a higher contactless limit could spark more fraud by delaying a measure that was also expected to take place April 1. Financial institutions were planning to launch a system called “confirmation of payee,” but have moved the effective date to June 30, reports The Guardian newspaper. The new measure includes a matching process for names, account numbers, and sort codes, the newspaper’s report said.

But fraud on contactless transactions so far has been well-contained, totaling 3.3% of all card-fraud losses, Metro.co.uk reported, citing UK Finance’s figures. All told, U.K. card users spent £80.5 billion ($94.2 billion at current exchange rates) via contactless transactions last year, according to UK Finance., up 16% from 2018.

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