The introduction of contactless payments has slowly eradicated the need for cash in many situations. Originally the contactless limit was £30. But, it has been rising ever since.
Should you be worried about the new contactless limit? Opinions vary depending on who you speak to. I will explain the pros and cons, as well as discussing what the new limit will be. Do share your views in the comments section. It would be great to hear what other people think about the change.
This post will cover:
- What’s the change to the contactless limit?
- What are the positives?
- And for the negatives?
- What else should I consider about contactless payments?
What’s the change to the contactless limit?
From 15 October, the limit for contactless payments in the UK will increase to £100. This is over double the current £45 limit.
UK Finance – the organisation representing banks – said some retailers will accept the higher payments straight away. Others will need a bit longer to adapt.
Payment terminals will need to be updated. So, it will take “some time” for the £100 limit to be available at all checkouts.
The first contactless limit increase for credit and debit cards occurred near the start of the pandemic. This was at least partially due to fears that the virus could be spread through surfaces.
At the time, some shops stopped all cash payments, while others lowered the value of transactions they would accept cash for to encourage customers to use their cards.
Our understand of the virus has since increased and these immediate fears have largely dissipated. However, the direction of travel seems to be firmly towards more credit and debit card payments.
I can’t remember the last time I paid using cash!
What are the positives?
Many people are in favour of increasing the contactless limit.
Marc Docherty of UK Finance is one of those. He believes the change will have an “enormous positive impact” for both shops and consumers.
He argued that increasing the limit to £100 will allow the UK economy to secure the predicted growth dividend as the economy powers back.
For retailers and shops, Marc said the change “offers the prospect of achieving increased and higher sales volumes, business as well as operational efficiencies and a broader range of applications across higher-value industry, market and product sectors.”
Essentially, he is saying that the new limit will encourage customers to spend more, which in turn will help the shops.
On a personal level, this might not be good. It could impact your budget if you spend significantly more. However, if you’re still spending within your means, this may be good for the general economy.
When shops do well, they employ more people. In turn, these people have more money to spend on goods and services.
Of course, there will be initial costs for retailers. They will have to upgrade their payment systems to be able to cater for the new limit.
For consumers, Marc says the increase limit will offer “greater flexibility and convenience”.
“During the pandemic, contactless payments in food supermarkets kept the economy going and customers connected. Now these benefits can be extended across all sectors for retail and business transactions.”
And for the negatives?
Not everyone is as upbeat about the change to the contactless limit.
Laura Suter, the head of personal finance at investment firm AJ Bell, said there are two key potential problems with the change.
There are worries that if your card gets stolen, thieves can take far more than before you manage to cancel your cards – or even realise it’s been taken.
“It is a thief’s dream, as they can take far more of your money in each transaction if you card is lost or stolen,” Laura said.
It’s more important than ever to be aware of all your belongings and keep them safe. One area I always worry about is when I use my card to pay on public transport. Although you may be in a rush to get a train, always take the time to put your card away safely first. It’s worth the extra 5 minutes to your journey!
If you think your card has been stolen, don’t put off cancelling it.
It may cause some hassle if you end up finding it later. But that is much more preferable to a thief racking up £1000s on your debit card.
The other main concern is for those that are already in debt, or struggle with spending too much.
There is a genuine risk that these individuals could find themselves getting further into debt.
Laura argued: “The easier a card transaction is the less the consumer is actively thinking about how much they are spending, meaning it’s easier to rack up larger bills on a credit card.”
What else should I consider about contactless payments?
If you use Apple Pay or Google Pay you won’t notice a difference. There hasn’t been a contactless limit on either provider for a long time. If these providers can manage it without a problem, many suggest there’s no reason there should be a limit on normal contactless payments.
Depending on your attitude to spending, contactless payments can feel like you’re not really spending money. You may need to put a bit more care into your budget to make sure you don’t over-spend when the contactless limit increases.
Finally, make sure you don’t forget your PIN. The chances are – as the contactless limit increases – you’ll be needing to put it in less and less.
It’s still important to remember it though. You don’t want to get caught out unable to pay because you can’t remember your PIN!
If you enjoyed this post, you might also be interested in this one. It discusses how you can save money on your commute.
Don’t forget to follow me on social media @Katie20Percent to keep up to date with all my latest posts and find more money tips!