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In the past four years the number of contactless payments in the UK has risen from seven per cent of all payments to 27 per cent, as highlighted in UK Finance's recent Payment Markets report. The increase accelerated in 2020 when contactless payments grew by 12 per cent, further spurred on and facilitated by a 50 per cent limit increase of £15 on single payments from £30 to £45 on 1 April 2020. The proportion of debit card payments using contactless has risen since the onset of Covid-19, from four out of ten in 2019 to six out of ten by September 2020.
As we begin to move out of the pandemic, the Financial Conduct Authority (FCA) has changed its rules following a public consultation, responding to ?evolving consumer behaviour'the needs and expectations of consumers?and the changing ways in which consumers prefer to pay?.
From 15 October 2021, retailers and merchants will see a further rise to the single payment limit for a contactless card transaction, increasing from £45 to £100. There is broad support among financial and banking communities building the systems changes now, and wide industry adoption of the new increased £100 limit is expected.
This decision is likely to encourage consumer spending post-lockdown and boost economic recovery which the Organisation for Economic Co-operation and Development (OECD) predicts to be 7.2 per cent this year and 5.5 per cent in 2022. Meanwhile the Confederation of British Industry (CBI) expects GDP growth of 8.2 per cent in 2021 and 6.1 per cent in 2022.
I believe these changes will have an enormous positive impact and will enable the UK economy to secure the predicted growth dividend as the economy powers back. They are also likely to have a positive effect for retailers, merchants and consumers.
Chancellor Rishi Sunak said: "As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the country."
While the increased payment limit is welcomed by many, others have raised concerns that it may make it easier for fraudsters to steal larger sums of money from cardholders. However, with increasingly sophisticated counter-fraud approaches rooted in biometrics, Big Data and A.I., the likelihood is that contactless transactions will continue to give consumers and retailers a secure payments experience.
With the changes coming into effect in October, this should give time for the high street to fully adapt ahead of the peak retail season of Christmas. Ultimately, the increase in the contactless payment limit to £100 is a change that should prove popular with both consumers and retailers.
Marc Docherty, HEAD OF UK ACQUIRING / LARGE - STRATEGIC BUSINESS, WORLDLINE