Recent discussions among academics suggest that spontaneous spending may increase if the limit on contactless cards is either raised or eliminated. Currently, purchases over £100 require a four-digit PIN, which acts as a reminder of spending levels and may reduce the likelihood of incurring debt through impulsive buys.
The UK’s financial regulator recently proposed allowing banks and card providers to establish their own limits, potentially enabling some to remove them altogether. This has prompted a conversation about the role of contactless limits, as banks and some consumers advocate for the ability to set personal thresholds.
Contactless payments have been widely adopted since their introduction in the UK in 2007, with rising limits from £10 initially to £100 in 2021, following significant increases during the pandemic. These changes corresponded with higher average expenditures via contactless methods. However, it’s uncertain if consumers would spend significantly more if they no longer faced the PIN requirement.
Economists have raised concerns about the possible implications for spending habits, particularly regarding credit cards, where ease of payment may lead to unplanned purchases. Removing the friction created by PIN entry might make consumers less aware of their spend amounts, which could be problematic.
Amid these discussions, a stark contrast has emerged with technology trends, as many consumers now use smartphones for payments, which already lack limits due to their security features. Proponents of scrapping contactless limits argue this change would align the UK with payment practices in other countries.
However, concerns remain about the security risks and potential for misuse without set limits. Charities have noted that unlimited contactless capabilities could enable economic abuse in vulnerable situations, underscoring the importance of considering consumer protection alongside convenience. The debate surrounding contactless payment limits continues to evolve, reflecting broader shifts in consumer behavior and societal needs.
Source: https://www.bbc.com/news/articles/cevzepl3vz1o?at_medium=RSS&at_campaign=rss