How to keep in control with cash on tap

Stay safe with the new £100 contactless limit on cards

PEOPLE love contactless cards because they make paying at the till quick and easy with no need to remember a PIN. But it’s hard to shake off the nagging fear that they are also exposing us to fraud.

If somebody gets hold of your card, either by stealing or scanning it, there is very little to stop them going on a spending spree on your tab.

Those fears will have multiplied now the spending limit has just been more than doubled from £45 to £100. The limit has risen threefold from £30 in April last year.

The other concern is contactless cards make it just a little bit too easy to spend money, and lose track of where your account balance stands. So don’t become tap-happy.

£100 contactless rollout begins

The national rollout of the new £100 contactless card spending limit for payments began last Friday.

This means we can make bigger transactions on our debit and credit cards without touching the pin pad, although it could take months for all retailers to update their terminals.

This is big news because six in 10 of all debit and credit card transactions were contactless in the first half of this year, according to UK Finance.

This accounted for 6.6billion payments with a total value of £81.4billion.

UK Finance chief executive David Postings said shoppers are fully protected against any losses due to unauthorised card fraud, say, if their card has been stolen.

“Every card also has an in-built security check which means that after a certain amount of contactless spending or transactions, customers need to enter their PIN to verify they are the genuine cardholder,” he says.

It goes without saying that customers should report lost or stolen cards to their bank immediately – but is this enough?

Happy fraudsters

Laura Suter, head of personal finance at AJ Bell, says criminals will be leading the cheering for the higher contactless limit payment.

“This is a paradise for thieves who can steal hundreds of pounds from you before you’ve even noticed,” she adds.

Under the previous £45 limit, fraud protection required everyone to enter their PIN if making multiple transactions up to £130.

“Now thieves will not face a request for a PIN until they’ve spent £300. If you have multiple cards, the total theft could be even higher,” Laura says.

Thieves can also exploit contactless tech, using small scanning devices at close range that can read your card’s number and expiry date, allowing them to make online transactions.

Some cards have apps that let you freeze your card if it is lost or stolen but Laura is sceptical.

“This works for younger or digitally savvy customers, but leaves many vulnerable and older people out in the cold.”

Halifax, Lloyds and Bank of Scotland let customers set their own limit, between £30 and £95, but only on debit cards.

“Starling Bank lets you set a limit of between £10 and £90,” Laura adds.

Barclays, Nationwide, NatWest and Santander allow you to opt out of contactless altogether, either by sending out a new card, or disabling the contactless functionality. But

Laura says: “HSBC, Barclaycard, American Express, Capital One and MBNA won’t allow a personal limit nor will they turn off contactless.”

In most cases, you’ll have automatically switched to the £100 rate. “Many will sleepwalk into a £100 limit,” she says.

So what happens if your card falls into the wrong hands? Contactless card fraud totalled £7.6million in the first half of this year.

Laura says a combination of a higher contactless limit and the end of lockdown means this will surely leap in the second half. Banks will reimburse you for any card fraud, including fraud that happened before you notified the bank of the theft.

Yet City regulator the Financial Conduct Authority says fraud rate data suggests there was “no significant increase” after the £45 limit was

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Don’t sleepwalk straight into debt

There is another danger. Spending on a contactless card is so easy that you may be tempted to do a little bit

too much of it.

Amon Ghaiumy, co-founder financial technology company Ophelos, says the higher contactless transaction limit could quickly lead consumers down a slippery debt slope.

“It is too easy to lose track of how much we are spending,” he adds.

He suggests making it a principle to “pause before you pay”.

“You could adopt the 24-hour rule, where you don’t buy anything unless you’ve thought about it for a whole day, or simply asking yourself the question ‘do I really need this?’ before you hit check out.”

Myron Jobson, personal finance campaigner at Interactive Investor, says contactless credit cards that typically allow users to slip into their overdraft without rejecting payments are particularly dangerous.

And many of us have got into the habit of not taking receipts, especially when using self-service checkouts. “This makes it even harder to keep track of spending,” Myron says.

If worried, he suggests withdrawing cash ahead of a shopping trip to ensure you stick to your budget.

“Otherwise, ask your bank for a card without contactless technology.”

Despite these concerns, three quarters say that the ease and speed of contactless trumps security worries, Pete Wickes, general manager, EMEA, at Worldpay, claims.

“Younger generations have embraced contactless technology but the technology is also popular with older consumers.

“Almost three quarters of the over-65s now find it easier to pay via contactless,” he says.

The pandemic has also driven acceptance, as people no longer need to touch the keypad to complete a transaction.