The amount Britons will be able to spend on contactless cards without entering their Pin could more than double to £100 under new proposals proposed by regulators.
The Financial Conduct Authority said it would be ‘seeking views’ on whether to up the contactless limit from £45 currently as part of a consultation in recognition of ‘changing behaviour in how people pay.’
The move would mean British families would be able to pay for their average weekly grocery bill, £56.60 in 2019, or fill up a 55-litre Ford Focus, which costs around £65 now, without keying in the four-digit password.
Grocery bills and petrol costs could be paid for without entering a four-digit Pin code under the proposals
The proposal, which follows the upping of the contactless limit from £30 to £45 last April in response to the coronavirus pandemic, comes as more and more Britons opt for more contactless payment methods as a result of the pandemic.
Government guidelines have encouraged businesses to adopt contactless payment methods where possible, which saw contactless debit card purchases reach a record high last September.
Close to two-thirds of debit card purchases were contactless, while 687million out of 1.7billion credit and debit card payments in October were contactless.
While this marked a sharp fall on September, largely due to tighter coronavirus restrictions, the value of these rose 15.8 per cent on the same month in 2019 to £8.1billion.
Data from Barclaycard, which accounts for nearly £1 in every £3 spent in the UK, found the average amount spent per contactless payment grew by a third to £12.38 in 2020, with total contactless spending increasing 7 per cent.
Trade body UK Finance said it ‘looked forward to seeing more details from the FCA on its proposals’ in response to Wednesday’s announcement.
The average family’s grocery bill of £56.60 a week could be paid for without entering a Pin, under the proposed changes from the Financial Conduct Authority
‘The industry believes that a more flexible approach could be merited in future, which takes into account consumer demand, fraud prevention, security and convenience’, it added.
Rules introduced in September 2019, known as ‘Strong Customer Authentication, mean banks will often require cardholders to enter a Pin after five transactions in a row in a bid to prevent those who have their cards stolen from having their bank accounts emptied.
Contactless card fraud actually fell by a fifth in the first six months of 2020 to £8.2million, the first fall since 2013, likely due to a fall in face-to-face transactions during the lockdown.
The regulator also said customers should do their banking online wherever possible, and reiterated it was mandatory for Britons to wear face coverings in bank branches amid reports of an increase in attacks on staff who attempting to maintain social distancing or enforce rules on face coverings.
The boom in contactless payments appears to have come at the expense of cash.
Some 71 per cent of people surveyed by the Bank of England last year said they were using less cash than they did before the pandemic, while LINK, which runs the country’s cash machine network, found the amount of money withdrawn from ATMs fell around 30 per cent to £81billion last year.
‘The coronavirus has changed our relationship with cash.
‘More people are now confident and happy to shop online or use contactless payments’, LINK’s chief executive, John Howells, said.
The fall appears to have been due in part to fears that cash could help spread the coronavirus, however the chances of this were found by the Bank of England last November to be low.
Nonetheless, changing behaviour and guidelines from the Government have seen both businesses and consumers move away from cash, often against some people’s wishes.
The consumer group Which? found last week that 34 per cent of people surveyed were turned away when they tried to pay with cash, with grocers the likeliest to have gone cashless.
Gareth Shaw, head of money at Which?, said in response to the announcement by the FCA: ‘Raising the contactless payment limit will be helpful for those who are comfortable managing their money digitally and is further demonstration of the banking industry’s acceleration towards cashless payments.
‘However, the focus cannot solely be on making things more convenient for those that can benefit from developments in payment technology.
‘Millions of people still rely on cash to pay for essential products and the cash network needs to be protected for them, as the rapid pace of cash machines and bank branch closures shows no sign of slowing down.
‘Legislation needs to be introduced by the government as soon as possible to safeguard access, while the regulator must track cash acceptance, as legislation will be undermined if there is nowhere to spend it.’
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