UK Budget 2021: vulnerable customer issues arise around contactless limit increase

Out-Law News | 03 Mar 2021 | 4:54 pm | 1 min. read

Card providers should consider introducing measures to protect vulnerable customers in light of the UK government's decision to increase the legal limit for single contactless payments, an expert in payments regulation has said.

Angus McFadyen of Pinsent Masons, the law firm behind Out-Law, was commenting after the decision to increase the existing contactless payments limits were outlined as part of UK chancellor Rishi Sunak's budget announcement on Wednesday.

The Treasury said: "To further support UK consumers and businesses during the Covid-19 response, and following a public consultation by the Financial Conduct Authority, the government has approved an increase to the legal contactless payment limits previously set by the European Commission. This will allow banks to support single contactless payments up to £100, and cumulative contactless payments up to £300, without the need for customers to input their chip and pin. The government looks forward to the banking industry implementing the new limits later this year."

Currently, the legal limit for single contactless payments in the UK is £45.

McFadyen said: "Increasing the contactless payment limit has a number of implications that need to be considered – particularly around the increased risk of fraud and wider card-related crime. The industry will need to actively monitor for this and have efficient systems in place for better detection. In the longer term, if fraud levels rise, then we may see an increase in cost of contactless transactions."

"In addition, the new limit may heighten the risk of problem debt and, at a time where there are a reported 27.7 million adults in the UK with characteristics of financial vulnerability, banks will need to work with their customers to enable them to opt out or limit their own contactless spending levels," he said.

The Financial Conduct Authority recently issued finalised guidance for firms on how to treat vulnerable customers.