z-kolkiemz-kolkiem

Contactless limit increase – a cause for concern?

The UK has increased the contactless payment limit to £100 – should this be cause for concern?
Share on facebook
Share on linkedin
Share on twitter
Share on email
Published 14 October
5 mins

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?

We address some of the facts and fiction around contactless cards below:

There are no safeguards with a contactless card – FICTION

Contactless payments are secure, and you benefit from the same fraud protection as you would when using your card with a PIN.

Contactless now accounts for more than a quarter of all UK payments - FACT

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

The UK is the only country to have such a high spending limit – FICTION

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

Increasing the contactless card limit will mean an increased risk of fraud – FICTION

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

A criminal can take money from my card just by brushing past me in the street or standing close on public transport – FICTION

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 criminal can steal all my details from a contactless card - FICTION

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.

If a criminal got hold of my card, they could keep making contactless payments - FICTION

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.

Criminals could still use my card after it’s been cancelled – FICTION

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.

I could accidentally pay for something when queuing at a checkout - FICTION

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.

If I’ve got more than one contactless card in my wallet, I could end up paying more than once – FICTION

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.

My bank will refund fraudulent contactless payments – FACT

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 client.services@nedbankprivatewealth.com, or call +44 (0)1624 645000.

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
5Half-year-fraud-update-2021-FINAL.pdf (ukfinance.org.uk)
6UK contactless payments limit is rising to £100 – should you be worried? | Contactless payments | The Guardian

Access more of our company news

The 16th issue of our client magazine is out now

9 Sep

   |   <20 mins

In the latest edition of our client magazine, Opportunity, we review the role of philanthropy post pandemic, take a look at the bitcoin phenomenon and more.

August's business update amid COVID-19

20 Aug

   |   1 min

We provide another operational update relating to COVID-19, with news from all of our international offices.

June's business update amid COVID-19

1 Jun

   |   1 min

This is the latest update as to how we, as a business, are operating as a result of the lockdown restrictions stemming from the coronavirus pandemic.

Webinar: fraud and cybercrime

4 May

   |   31 mins

During a 30 minute update, we looked at the types of scams that fraudsters and cybercriminals are currently running and how people are far too easily duped.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.


We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Please call us today on +44 (0)1624 645000. Our office hours are weekdays from 8am to 8pm (UK time), except for UK public holidays.

 

Or please complete and submit the below form and one of the team will get back to you as requested.

* Required fields

Search suggestions