Speculation mounts over contactless limit rise

Reports have suggested that trade bodies and card processing networks have urged HM Treasury to increase the limit of contactless payments to £100, but UK Finance and the Financial Conduct Authority (FCA) refused to comment on developments.

Previously, UK contactless payments were regulated under the European Union’s second payments directive (PSD2) which limits contactless payment to €50 (£45).

While the UK increased its contactless limit to £45 from £30 in April, other countries have increased their limit even higher. At the same time, Australia raised its limit to $200 (£114) while Canada card issuers raised their contactless limit to $250 (£145).

“The pandemic has undoubtedly been a challenging time for businesses and our priority is to continue to support them as they adapt to new ways to serve customers safely,” said  Kerri-Ann Santaguida, vice president and general manager of global merchant and network services at American Express Canada, in an email.

“Since we increased the contactless limit from $100 to $250 last year to reduce physical contact at point of sale (POS), we have seen an increase in both the number of contactless transactions and the value of contactless transactions.”

One of the concerns around raising the contactless limit is an increase in fraud compared to chip and pin. But payment providers are content.

“Contactless payments are more secure than traditional swipe or card not present acceptance methods. This is due to that contactless methods utilise single use tokens for payment processing and the token has no value or use when stolen,” said Louis Hoch, CEO of Usio, in an email.

While more people have been using contactless and mobile payment since the beginning of the pandemic around the world, Hoch says that POS upgrade costs for merchants remains a hurdle and added that higher costs associated with enabling chips and third-party wallets is also a factor that card issuers take into consideration.

“Apple Pay demands a cut of the interchange for any card processed on Apple Pay to a branded network (Visa, MC, AMEX, etc) – higher costs means not all card issuers will enable their cards – especially limited use cards like a Visa or MC gift card.”