Why banks opted to raise the contactless limit to £100 and how will this affect consumers?

By Michael Donald, CEO of ImageNPay,

Will consumers win or lose after UK banks agreed to allow Visa and Mastercard to introduce a new contactless limit of £100?

It took 4 years to move from £20-£30, then in the first 6 months of the pandemic it jumped to £45.

The main question should be why £100 when the average spend on a debit card per transaction in the UK is under £45? (Source UK Cards Association).

The Pro’s:

The advantage of course will be a faster checkout experiences and less fingers tapping pins onto Point of Sale terminals in a bid to reduce physical interactions in a pandemic World.

This will be especially relevant in the hospitality industry however I cannot think of many other areas where this will create any advantage versus the potential for fraud if the card falls into the wrong hands. Although I am happy to be corrected on this point.

The Con’s:

Most consumers I have spoken to and also merchants in the course of my daily routine have expressed real concerns about fraud.

The move to £45 was welcomed however most of the sentiment expressed on the £100 limit has been, is my card safe, how much will fraud increase, how many £100 taps to pay can occur before the bank realises its fraud, if I lose my debit card how much could a fraudster take from account.

From the merchant side the question has been: how much of the increased fraud will be charged back?

Although both the treasury and the FCA supported the move, there was certainly no demand from consumers for this change.

While a public consultation did take place, the real challenge will come from fraudsters and scammers who in my 30 years in payments are always one step ahead of the banks and the consumers in how they leverage gaps in the ecosystem for criminal gain.

Theft of cards and targeted incidences of wallet theft may increase, especially in more crowded venues, and when you consider that the average UK consumer has 3 to 4 cards in their wallet this would be a big incentive for the criminal community to change its mode of operation.

Even Rishi Sunak, the Chancellor, was quoted as saying increasing the limit will make it easier and safer to pay whilst being secure, whether at your local shop, or pub etc.

I am not sure where he shops or how much he spends in pubs, but I would again point out that the average transaction fee in general is below £45 and the prompt for inserting the card and using pin for amounts above that is what kept UK consumers safe. NOT raising the limit to £100 where no such anti-fraud measure is required!

The Alternative:

My advice for consumers would be if you are really concerned then look at digital options, such as putting your card in Apple Pay or Google pay, or use virtual pre-paid cards which you can top up on your phone with the limit you choose, as these virtual options can mask your card’s details.

Also be alert and if you don’t need to carry all your cards with you then don’t and never put your wallet in your back pocket, also use one of the many physical wallet devices that keep your card from being tapped by devices without your knowledge.

The environmental impact of the payment sector:

You might think that with the payment sector’s carbon footprint being so large – there are over 22bn debit and credit cards in circulation globally (Source Nilson) and one in three cards are re-issued every year – that there would be a sharp interest from both banks and consumers in the sector embracing digital options.

But instead, banks are converting entire portfolios to recycled plastic in a bid to appease consumers by jumping on the greenwashing bandwagon.

The move to a cashless society, while definitely a factor in the UK for supporting the £100 limit, does not really help in reducing the carbon footprint of banks.

How big payment brands are ‘Green Washing’ their eco-credentials:

The most recent move from big names in UK banking to switch from Visa to Mastercard was RBS, which by the way I love and have been a customer for 40 years.

Their eco-claims were pure babble – RBS argue they are saving 55 tons of toxic PVC cards by moving to recycled plastic cards, but I’m far from convinced…

In order to switch the customer’s card to a ‘greener alternative’, the bank sends out 16m paper letters, which will go in the bin telling customers they are changing brands, they then tell consumers to dispose of the 16m cards they already have, which by the way are the toxic PVC product, no no no don’t send them back to us, cut them up and bin them so 55 tons of the most toxic plastic goes into landfills.

With me so far, good…. Now the recycled plastic cards sound great, but the issue is they are made on the other side of the World, can cost more to produce, are not 100% recyclable themselves – all in all the entire process is far from carbon neutral.

In fact according to Gemalto and Thales, one of the World’s biggest card producers, a normal plastic card process produces is about 150g re carbon, going to PLA or other forms of recycled product will reduce this to 100-110g depending on where the card is produced and the carbon associated with shipping it halfway around the World.

The end result is still more plastic, same number of cards or more, no reduction in carbon footprint from production, shipping, or mailing, and no global process for recycling the recycled plastic when it reaches its expiry date.

With most consumers in the UK having a smart phone, and according to the UK Govt we are one of the leading digital economies in the World, it begs the question, why aren’t banks and politicians adopting smart processes to skip plastic and encourage consumers to go straight to digital when they are offered a new card?

Surely a digital card is a more effective strategy to save the World than raising the payment limit to £100?

By Michael Donald, CEO of ImageNPay,

Will consumers win or lose after UK banks agreed to allow Visa and Mastercard to introduce a new contactless limit of £100?

It took 4 years to move from £20-£30, then in the first 6 months of the pandemic it jumped to £45.

The main question should be why £100 when the average spend on a debit card per transaction in the UK is under £45? (Source UK Cards Association).

The Pro’s:

The advantage of course will be a faster checkout experiences and less fingers tapping pins onto Point of Sale terminals in a bid to reduce physical interactions in a pandemic World.

This will be especially relevant in the hospitality industry however I cannot think of many other areas where this will create any advantage versus the potential for fraud if the card falls into the wrong hands. Although I am happy to be corrected on this point.

The Con’s:

Most consumers I have spoken to and also merchants in the course of my daily routine have expressed real concerns about fraud.

The move to £45 was welcomed however most of the sentiment expressed on the £100 limit has been, is my card safe, how much will fraud increase, how many £100 taps to pay can occur before the bank realises its fraud, if I lose my debit card how much could a fraudster take from account.

From the merchant side the question has been: how much of the increased fraud will be charged back?

Although both the treasury and the FCA supported the move, there was certainly no demand from consumers for this change.

While a public consultation did take place, the real challenge will come from fraudsters and scammers who in my 30 years in payments are always one step ahead of the banks and the consumers in how they leverage gaps in the ecosystem for criminal gain.

Theft of cards and targeted incidences of wallet theft may increase, especially in more crowded venues, and when you consider that the average UK consumer has 3 to 4 cards in their wallet this would be a big incentive for the criminal community to change its mode of operation.

Even Rishi Sunak, the Chancellor, was quoted as saying increasing the limit will make it easier and safer to pay whilst being secure, whether at your local shop, or pub etc.

I am not sure where he shops or how much he spends in pubs, but I would again point out that the average transaction fee in general is below £45 and the prompt for inserting the card and using pin for amounts above that is what kept UK consumers safe. NOT raising the limit to £100 where no such anti-fraud measure is required!

The Alternative:

My advice for consumers would be if you are really concerned then look at digital options, such as putting your card in Apple Pay or Google pay, or use virtual pre-paid cards which you can top up on your phone with the limit you choose, as these virtual options can mask your card’s details.

Also be alert and if you don’t need to carry all your cards with you then don’t and never put your wallet in your back pocket, also use one of the many physical wallet devices that keep your card from being tapped by devices without your knowledge.

The environmental impact of the payment sector:

You might think that with the payment sector’s carbon footprint being so large – there are over 22bn debit and credit cards in circulation globally (Source Nilson) and one in three cards are re-issued every year – that there would be a sharp interest from both banks and consumers in the sector embracing digital options.

But instead, banks are converting entire portfolios to recycled plastic in a bid to appease consumers by jumping on the greenwashing bandwagon.

The move to a cashless society, while definitely a factor in the UK for supporting the £100 limit, does not really help in reducing the carbon footprint of banks.

How big payment brands are ‘Green Washing’ their eco-credentials:

The most recent move from big names in UK banking to switch from Visa to Mastercard was RBS, which by the way I love and have been a customer for 40 years.

Their eco-claims were pure babble – RBS argue they are saving 55 tons of toxic PVC cards by moving to recycled plastic cards, but I’m far from convinced…

In order to switch the customer’s card to a ‘greener alternative’, the bank sends out 16m paper letters, which will go in the bin telling customers they are changing brands, they then tell consumers to dispose of the 16m cards they already have, which by the way are the toxic PVC product, no no no don’t send them back to us, cut them up and bin them so 55 tons of the most toxic plastic goes into landfills.

With me so far, good…. Now the recycled plastic cards sound great, but the issue is they are made on the other side of the World, can cost more to produce, are not 100% recyclable themselves – all in all the entire process is far from carbon neutral.

In fact according to Gemalto and Thales, one of the World’s biggest card producers, a normal plastic card process produces is about 150g re carbon, going to PLA or other forms of recycled product will reduce this to 100-110g depending on where the card is produced and the carbon associated with shipping it halfway around the World.

The end result is still more plastic, same number of cards or more, no reduction in carbon footprint from production, shipping, or mailing, and no global process for recycling the recycled plastic when it reaches its expiry date.

With most consumers in the UK having a smart phone, and according to the UK Govt we are one of the leading digital economies in the World, it begs the question, why aren’t banks and politicians adopting smart processes to skip plastic and encourage consumers to go straight to digital when they are offered a new card?

Surely a digital card is a more effective strategy to save the World than raising the payment limit to £100?