From: FinTech Global
Britain is increasing the spending cap for contactless payments from £30 to £45 from April 1 to help people cope with the coronavirus outbreak. However, the move may increase the risk of fraud.
UK Finance, the UK body representing the British banking and finance industry, announced the decision. The increase comes after consultations within the industry as well as with the retail sector and follows similar increases in several other European countries over the past week.
However, while discussions of the raise were already ongoing, the outbreak of the coronavirus has expedited the introduction of the new limit. The reason for that is that the industry has noted an increase in contactless payments as people opt for this alternative to avoid spreading or catching the disease.
“The payments industry has been working closely with retailers to be able to increase the contactless payment limit to help customers with their shopping at this critical time for the country,” said Stephen Jones, CEO of UK Finance. “This will give more people the choice to opt for the speed and convenience of purchasing goods using their contactless card, helping to cut queues at the checkout. The industry continues to work closely with the government and regulators to support customers impacted by COVID-19 and ensure that they can pay in a way that suits them.”
Lisa Fernihough, head of financial services consulting at KPMG, the professional services network, welcomed the move. “The fact that retailers and payment providers have worked together to increase the contactless limit is just one of the many extraordinary measures being taken by UK organisations to ensure society sees through this crisis as safely as possible,” she said.
However, Fernihough warned that the increased limit could give criminals more opportunities to defraud people. “The rules around how often customers are authenticated via chip and pin have been relaxed, meaning someone with a contactless card can spend more money, more frequently,” she explained. “The changes may create an opportunity for fraudsters, putting added pressure on the fraud departments of banks and credit providers and driving the need for more investment in technologies that can identify and prevent fraud.
“The other important consideration is making sure the 1.5 million unbanked UK citizens aren’t left behind. In the short term, anyone without a bank account will need to physically visit stores and spend cash to make their essential purchases. The move away from physical currency was already well underway: a quarter of us in the UK use a digital only bank and only a third of under 30s carry cash day-to-day, but if the ramp up in cashless payments works to cut down on contagion and queues at the till then we could see the demise of cash rapidly accelerated. That will put the need to address financial inclusion front and centre of banks’ priority list.”
The news also seems to add to the notion that the coronavirus could make the UK an even more cashless society. FinTech Global reported in March that the pandemic had already made more retailers adopt more cashless payment alternatives in their efforts to limit the spread of the virus.
Copyright © 2018 RegTech Analyst
