Don’t lose CONTACT with your CASH
Cash is no longer king as tapping cards is the preferred way to pay. But now experts warn it will lead to a surge in fraud anda rise in debt
USE of contactless card payments has been soaring over the past 18 months. As the pandemic hit, cards became the preferred way to pay for both customers and businesses alike.
Banks raised the tapping limit to €50 from €30 as lockdown hit but now it seems that less of us are carrying cash now as we become more reliant on cards as our currency.
Figures released last month by the Banking and Payments Federation of Ireland revealed that we hit record levels of card payments for goods and services in June.
Irish consumers made 2.4 mllion contactless payments every in that monht, with 73 million contactless payments being made, worth more than €1.2 billion.
The payments were made as Ireland opened its doors again and Covid restrictions were eased for retail and hospitality outlets.
The average payment value for each transaction increased to €16.19, from €15.57 a year earlier.
‘At 2.4 million payments per day this is the highest daily level recorded since BPFI began gathering this data in 2016,’ Brian Hayes, Chief Executive of the BPFI said of the figures.
‘In volume terms, the figures represent a jump of 37 per cent year on year while we saw an increase of 43 per cent in the value of contactless when compared to the same period last year.’
Our move to card payments might be convenient but there are concerns as money experts fear it could lead to a rise in fraud and overspending.
Across the water in Britain contactless spending is also now higher than ever, while the use of hard cash has plummeted during the pandemic.
As a result the banks there are now introducing a new contactless limit of £100 (€115) which allows more money to be spent before the cardholder is asked to for a PIN number.
There is a strong chance that banks in Ireland will follow suit and raise the limit but contactless card fraud, although low in levels, does exist.
ALTHOUGH it has stayed low, this was in part due to the reduced opportunities for fraudsters because of lockdown restrictions. But personal finance experts fear this could start changing.
Pre-lockdown Bank of Ireland was forced to impose restrictions on debit cards for some customers over worries they have been compromised by fraudsters.
And our increasing use of the technology means we are more likely to be targetted.
Sarah Coles, from investment service Hargreaves Lansdown, says contactless card use makes bag snatching and pickpocketing more rewarding, especially with a higher limit on the card.
‘We could see an increase in these kinds of thefts. Contactless features have always been a weak link thieves could exploit.’
Experts also warn that constant card use encourages shoppers to spend above their means and risk falling into debt.
Martyn James from complaints website Resolver, says: ‘We are already starting to see people seeking help with financial difficulties after coming out of lockdown and realising they are overspending.
‘Contactless payments allow people to disconnect from their purchases,’ he says. We are all guilty of impulse purchasing during lockdown and now things are opening up, money experts are warning us to be more mindful about what we are spending.
Now that we can socialise again, our guard is down and we are more vulnerable to spending more than we should,’ James says.
He also believes that raising the limit on debit cards is not a good idea.
‘The higher limit is an incentive to criminals, and I would personally prefer to enter a four-digit number than risk losing hundreds if someone stole my wallet.’
Myron Jobson, from broker Interactive Investor, says ‘Contactless payments are easy and frictionless but also feels higher limits could result in people spending beyond their means which ‘could lead to debt issues at a time when many are already suffering financial strain owning to the pandemic.’
HE says it could prove to be a ‘slippery slope for some holders of contactless enabled credit cards that typically allow users to slip into overdraft without having their payment rejected.’
During the pandemic, the Government encouraged shops and restaurants to minimise contact with customers by using payment methods, such as contactless, and many are still refusing to accept cash now.
In June, our survey found one in five shoppers had been stopped from paying with cash.
Stacey Lowman, from financial coaching app Claro, says higher contactless card limits makes it ‘far easier for people to overspend and reduce the time they have to consider the impact their purchases have on their finances.’