What retailers and consumers need to know a couple of months on from the contactless limit increase

Marc Docherty

Head of UK Acquiring / Large - Strategic Business, Worldline

UK customers have become increasingly used to the contactless shopping experience since it first emerged in 2007. But the latest limit increase - from £45 to £100 in October – was significant, not least because it more than doubled the amount we, as the shopper, can spend without the use of chip and PIN but also because take-up and adoption has varied among merchants.

Indeed, some retailers are still unaware this limit increase took place. At Worldline, Europe’s largest payments provider, we are here to simplify the payments market and have recognised the need to highlight some of the ins and outs of the new change and what it means for consumers and merchants alike.

 

Which key bodies were involved in the contactless limit increase?

A variety of stakeholders were integral to the implementation of the new rise. First and foremost the Treasury and the Financial Conduct Authority made the decision to significantly raise the limit to £100, which has led to the UK having the seventh highest contactless payment limit in the world.

What originally in 2007 meant being able to buy a morning coffee and croissant with a contactless transaction, when the limit was £10, catapulted into the ability to purchase a full tank of fuel at a swipe of the card in the autumn of this year.

The banks and card issuers were also an integral cog of the new payments increase as they implemented the change and enabled card holders to set their own contactless payment limit to the number that’s most comfortable for the consumer.

Although some merchants are still unaware that their customers can pay for their goods with a contactless payment of up to £100, the vast majority have accepted the limit – it is worth noting that they are not obliged to do so- as it encourages consumer spending and accelerates the payment process. Furthermore the risk lies with the card issuer, who don’t wish to negatively stand out among their competitors.

The bank/card issuers are also equally responsible to make the higher contactless limit available to the public. In general, cardholders will be able to use the new limit if they have a good credit rating and payment history.

 

What do merchants need to do?

Merchants are responsible for deciding whether to accept the higher limit; if they do, they then need to make the necessary system changes to facilitate the increase.

This doesn’t mean they have to buy new terminals, however, to meet the customer needs. Instead, all they need to do is upgrade their system software to accommodate the changes, a process that typically lasts a few weeks depending on the appetite of the merchant and bandwidth. Both of these factors are integral to the speed of the process.

 

How long does implementation of the limit take?

Undoubtedly, both merchants and consumers may have wondered how long an increase in the contactless payment limit takes to implement. In truth it is a matter of weeks rather than months within the official starting point. Precedent suggests from the last rise – in April 2020, when the number increased from £30 to £45- that retailers were expecting the limit to be in place within a few weeks from April 1 before the pandemic was factored into proceedings.

In practice expectations were exceeded as shops rushed to minimise ‘touchpoints’ for customers to reduce the risk of transmission. It is therefore unsurprising that customers are as worried about using cash as they are about using chip and PIN- a mindset shift that has accelerated the implementation of the latest contactless limit and brought a new dawn for shoppers across the country.

 

The transactional fee factor

A merchant deciding whether to undergo the new limit may be affected by transactional fees. Indeed, an acquirer often charges minimal processing fees for contactless payments and is therefore a factor for merchants when they decide how best to bolster revenue.

It will still be some time before customers are fully used to the new £100 limit - it was roughly just 18 months ago since the last increase. This is particularly the case with the older generations who took some time to get used to an increasingly cash-less and cheque-less society even before the coronavirus affected everyone’s day-to-day lives.

Nonetheless, it’s still important to make retailers and consumers aware of how it will affect them, regardless of whether they want to adopt the new tools at their disposal, as the inevitable rising trend in contactless payments continues across the world.

 

About the author

Marc Docherty is Head of UK Acquiring / Large - Strategic Business, at Worldline. With more than 20 years’ experience working for blue chip organisations within the banking and payments sector, including Bank of Scotland, RBS, Barclaycard, AMEX and Visa, Marc’s expertise lies in business banking, factoring and invoice discounting, and cross border payments. He also has extensive experience in acquiring, having focused on the large corporate sector across the UK and Europe for several years.

Marc is passionate about driving solutions that deliver real value to customers whilst helping organisations reduce complexity and enhance the customer experience by providing a complete end-to-end payment solution.