Contactless card payment has been with us for 18 years. For many, myself included, it has transformed the way we pay for things: our weekly shop, a double espresso at the local coffee shop on a Saturday morning, or a glass of chilled Viognier down the pub on a Saturday night.
According to data released last week by Barclays, shoppers on average use contactless payment 236 times a year – up from 231 in 2023.
It’s not hard to fathom why many consumers like this payment form. It’s quick, safe and secure – and reduces the need to carry wads of cash in wallets and purses.
It’s also user-friendly, in that it works most of the time, although the florist at the market in my hometown six days ago was spitting lilies after his payment machine wouldn’t work because of a technical glitch at the service provider’s end.
Thankfully, I had enough cash on me (a crisp £10 note from the local Nationwide ATM) to pay for a bunch of his exquisite pink lilies, destined for pride of place in my lounge.
Yet the City regulator is itching to sex-up contactless payment. It has decided to scrap the current £100 limit on transactions without the need (most of the time) for a person to enter a personal identification number (PIN) to authenticate a payment request.
Instead, payment providers will be allowed to process purchases above £100 without the need for the payer to enter a PIN. The only proviso is that providers must ensure that any such payments can be identified as low risk.
The regulator, the Financial Conduct Authority (FCA), is so mad keen to shake things up that the rule change could be introduced as early as next year.
The City regulator has decided to scrap the current £100 limit on transactions without the need to enter a PIN to authenticate a payment request
It’s a recipe for disaster that could cause widespread consumer detriment as contactless cards are targeted by thieves – and our bank accounts quickly emptied as the criminals go on an unchecked blizzard of a spending spree.
Yes, we would still get any stolen money refunded by our bank, but the whole process would be hugely disruptive, time-consuming (have you tried ringing your bank recently?) and deeply traumatic.
Getting back £80 after your contactless card has been stolen and fraudulently used is stressful enough. Attempting to get back £1,000 would be in an altogether different stress league.
Indeed, the current rash of crime involving the plucking of phones from the hands of shoppers on the high street – and then shipping them overseas to be sold at a knockdown price – would look like a pin prick compared to the rampant stealing of contactless cards with (potentially) no payment limit.
As would the spate of shoplifting, fuelled by a reluctance by anyone other than the public to challenge the criminals (a year ago, I was given a lecture at my local Waitrose after unsuccessfully chasing after a shoplifter and putting myself in danger).
I’m not alone in raising such concerns about uncontrolled contactless payments. Consumer campaigner Martyn James predicts a ‘huge increase’ in wallet, purse, and bag thefts’ as thieves target contactless cards.
Removing the £100 contactless payment was one of a number of proposals FCA boss Nikhil Rathi outlined in a crawling letter to the Prime Minister earlier this yearÂ
Rocio Concha, director of policy and advocacy at consumer group Which?, agrees. She says: ‘Inevitably, fraudsters will seek to take advantage of these changes, so it’s crucial that regulators and industry work together to ensure fraud controls are applied properly to protect consumers.’
The reasons put forward by the FCA in support of such a change are as ridiculous as they are dangerous. The craziest of them is the suggestion that a more laissez-faire regime will support economic growth – Rachel Reeves’ distant holy grail.
Removing the £100 contactless payment was one of a number of proposals FCA boss Nikhil Rathi outlined in a crawling letter to the Prime Minister early this year in support of Labour’s growth agenda (what growth,you may ask).
The letter was written at a time when huge pressure was being put on regulators by Keir Starmer and Reeves to be more growth focused, rather than an impediment to growth.
The FCA went on to explain this extraordinary ‘growth’ claim in an ‘engagement paper’ published two months later. Here, it said that enabling more contactless payments could have ‘positive secondary impacts on growth through smoother consumer payment journeys, resulting in more sales and higher productivity’.
Being kind, I would say that is a pretty tenuous claim to make. Being brutal, it strikes me as utter baloney and evidence of a regulator eager to scratch the back of the Government.
What I also find bewildering is that the FCA is steaming ahead with these proposals despite there being little appetite for them among banks and consumers.
It admits as much in the document (quarterly consultation, number 49) it has just published explaining its intentions.
It says that more than three-quarters of consumers who responded to its March engagement paper preferred no change in the current contactless limits
(a £100 individual payment and a cumulative total of £300) before the need for a payer to use their PIN as authentication.
More surprisingly, a majority of industry respondents (banks and payment processors) wanted no change, pointing out ‘concerns of potential fraud increases’.
The FCA’s own estimates indicate that contactless payment fraud could increase by up to 131 per cent over the next three years if the single and cumulative limits are raised.
The other key fact in support of no change is that the average contactless purchase last year (according to Barclays bank) was just £16.10.
It’s a convenient payment tool for low-ticket items – the digital wallets on most smartphones, which have in-built authentication, are more suitable for bigger ticket purchases.
So, to summarise, consumers don’t want change, nor do a majority of banks, with banking lobby group UK Finance saying that £100 is the ‘right amount for now’.
Furthermore, current usage indicates that it isn’t needed, while any lifting of current limits would increase fraud.
It’s change for change’s sake. Surely the FCA has more important issues to tackle than meddling with a system that works perfectly well as it stands.
Indeed, it all smells to me of a regulator pandering to its ultimate boss, the Government. For consumers, the changes are nothing but harmful – and increase their chances of being victims of contactless card theft and fraud.
I think the £100 contactless payment limit should remain. Do you? Please email me at: jeff.prestridge@mailonsuday.co.uk
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