At first glance, I should be delighted with the limit for contactless payments going up from £45 to £100 from 15 October.
It makes life so easy: just tap and pay.
But that’s exactly the problem.
Easier payment encourages overspending
Anything that removes friction from the payment process encourages us to spend more. Think of the pain of handing over large sums in cash, counting out notes and coins, compared to waving your card around.
Gradually, banks and shops have removed hassle, so we no longer have to write cheques, sign credit card slips or type in our four digit PIN. Why do you think websites are so keen to save our card details for later? Amazon wouldn’t have introduced one touch payments if it didn’t bump up their revenue.
Contactless card payments make it easier to lose track of spending, and easier to give in to impulse purchases. Would you buy so much if you had to walk to a cash machine before every purchase?
Also, we’re used to thinking of contactless payments for small amounts – a cup of coffee, a bus ticket, a paper. That subconscious connection between contactless and spending small amounts could encourage us to spend more. But £100 isn’t an insignificant amount, and too many larger purchases could really dent our bank balances.
Paying by contactless card makes it all too easy to ignore how our spending adds up – and all too easy to bust through credit card limits and into overdrafts.
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Risk of theft
A higher contactless limit also leaves us more open to theft, if our cards are lost or stolen.
Fortunately, any criminal can’t go completely crazy. The rules say that you will need to put in your PIN after every five transactions, or after spending £300 in total, whichever comes first. So hopefully a thief wouldn’t be able to splash more than £300 of our hard-earned cash.
Some people worry about their card being scanned while in their bag. Turns out this is actually rare to non-existent. But if it’s a concern, consider keeping your cards in a (deep breath) Radio Frequency Identification (RFID) wallet, with a metal lining.
How to protect yourself
If you do have any concerns about the higher £100 contactless limit, here are some top tips:
- Set up instant payment notifications, if offered by your card provider. These will help you keep track of your own spending, as well as spotting any dodgy transactions.
- Change your PIN to something easy to remember, as it’s going to be harder to keep track if you use it less often.
- Set a lower payment limit, if your card provider allows this. Lloyds, Bank of Scotland, Halifax and Starling all do.
- Ask for a card that isn’t contactless, or ask your bank to turn off contactless for your card. Nationwide, NatWest, Barclays, and Santander will all let you opt out of contactless.
- Switch to paying by phone, if you prefer the extra security from face ID or fingerprint recognition.
- Stop and think before using your card. What else could you use this money for? How long did you have to work to earn it?
- Stop and think before letting someone else use your card. It is more likely to get lost if you give it to your kids to buy something, or to a friend for a round of drinks.
Now – over to you. What do you think about the contactless limit rising to £100? Great stuff or reason to worry? Do share in the comments, I’d love to hear.
I’ll be talking about the new contactless limit on BBC Radio Berkshire at 7.20am on Friday 15 October – do tune in!
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