Contactless cards were introduced back in 2007, with a £10 limit for buying small items. Despite initial reservations about how secure this new payment method would be, they soon caught on. According to the UK’s HM Treasury, the proportion of debit card payments made using contactless rose from four out of 10 in 2019 to six out of 10 in September 2020.1
Fourteen years since their introduction, there are now more than 135 million contactless cards in circulation in the UK and the number of contactless payments increased by 12% to around 9.6 billion during 2020.2
As a consequence, UK chancellor Rishi Sunak announced in his March budget that the maximum transaction limit would more than double from £45 to £100 later in the year. The rollout of this new limit began on Friday 15 October, but will the increased spending power reignite fears over card fraud?
Contactless payments are secure, and you benefit from the same fraud protection as you would when using your card with a PIN.
According to UK Finance, contactless payments jumped from just 7% to 27% of all payments over the last four years. In the UK, 83% of people now use contactless.3
While the EU retains a lower limit, the move to £100 will put the UK more in line with other leading economies such as the US, Australia and Canada, which have equivalent limits over £100.4
Fraud rates for contactless payments are very low. The value of contactless spending in the first half of 2021 was £66.5 billion and losses through fraud were £7.6 million, equivalent to less than 1p in every £100 spent.5
There is no evidence to suggest that a higher limit will increase this risk. The Financial Conduct Authority (FCA) takes fraud very seriously and has noted that fraudulent transactions have not increased significantly in other countries where the contactless limit was raised to the equivalent of £100 or more.6
Known as contactless ‘skimming’, this is the most common fear around contactless cards. However, over the last 14 years in the UK, there have been no verified reports of it actually happening. A contactless card will only work if it’s held a few centimetres from a card reader. A criminal would have to set up a retail account, obtain a card reader and then get within centimetres of your card.
In addition, when you use your card, the money goes through a secure card system, which means every payment can be traced through to the recipient. If you spot any suspicious activity on your account, the recipient of the payment could be identified and the money would be taken back.
A card can only be read if someone is extremely close and has a card reader. Even then, the most information that would be revealed is the card number and expiry date, both of which are visible on the front of any bank card. A criminal would be unable to access more personal details or discover your security code in this way.
Each contactless card has an in-built security check, which means when they hit a certain level of spending, a PIN will be required to verify the payment. Under the latest FCA rules, authentication will be necessary when the cumulative value of the transactions reaches £300, which places a finite limit on how much a criminal could spend, unless they know your PIN. You are also fully protected against fraud so would never be left out of pocket.
In the past, some low-value payments on contactless cards could be made offline, meaning a criminal could potentially get away with using a card after it was cancelled. Now, the way contactless payments are processed has changed and virtually every transaction is authorised by the bank, which means if your card has been cancelled, it will no longer work.
A contactless card will only work if it’s held a few centimetres from the card reader, so you would have to be extremely close for this to happen. In addition, the terminal must be activated to accept contactless payments and is programmed to only take one payment from one card for any transaction, reducing the risk further.
It’s impossible to pay with two cards at once. Every individual transaction must be keyed in by the retailer and card machines can only read one card at a time. If you were to present your wallet containing more than one contactless card, the cards would clash and no payment would be taken. It is always best to remove the card you want to use from your wallet.
You are fully protected against fraud, so will be refunded by your card provider for any money taken fraudulently. If you notice any suspicious activity on your account, contact your bank or provider straight away.
Should you have any questions or further concerns, please contact your private banker directly, or our client services team on email@example.com, or call +44 (0)1624 645000.
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1Britain raises contactless limit as COVID accelerates electronic payments | Reuters
2Contactless now accounts for more than a quarter of all UK payments | UK Finance
3Contactless now accounts for more than a quarter of all UK payments | UK Finance
4Contactless payment limit lifted to £100 | Financial Times
6UK contactless payments limit is rising to £100 – should you be worried? | Contactless payments | The Guardian
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