Is increasing the contactless card limit a good idea?

It’s no doubt that the inauguration of contactless card payments in 2007 has revolutionised how we, as consumers can conveniently pay for our shopping. Starting from what seems a mere £10 limit in 2007, to £30 in 2015, raised to £45 during the pandemic and will soon reach a 10x that of the initial limit at £100.

It’s clear that tap & go payments are a crowd favourite, as contactless payments accounted for one in four UK transactions in 2020. However, is the new limit necessary and will it pose a threat for those most at risk?

Chancellor Sunak’s positive yet clearly fiscal outlook on the matter remained hopeful, assuming it will boost public spending in-stores; thus, helping the UK economy bounce back from the pandemic.

On the other hand, Laura Suter, head of personal finance at AJ Bell, has highlighted how firstly, this could be “a thief’s dream” with new higher limits allowing them to access larger sums of cash more easily.

Not only this, but she also noted a correlation between the ease of making a card transaction and how actively a consumer is thinking about how much they are spending. This could be a slippery slope for those who are less aware or conscious of everyday transactions because let’s face it, exchanging tangible cash for a product feels like more of a commitment compared to simply tapping a card.

Finally, card fraud is a huge concern for banks and customers alike. A total of £7.6m was stolen through contactless cards and phones in the first half of 2021, and although this may seem like a lot, it only represents around 0.1% of contactless card payments over the same period. Whereas bank transfer scams in the same 6 months totaled £355.3m, suggesting that fraudsters would rather target the more lucrative methods, but this will undeniably exacerbate contactless payment fraud.

If you’re worried that this new limit could see your spending habits slip out of control, most banks will be introducing contactless limits if they haven’t already done so. Check out our table below to see if your bank can help you rein in your spending.

If your finances feel like they’re already running away from you, a formal debt solution could be a more effective option to deal with your debts. If you’d like to find out more about the debt solutions available to you, give us a call on 0141 816 0394 or complete our enquiry form.