Unlimited contactless cards may lead to spending sprees
According to academics, lavish spending is likely to increase if the maximum number on contactless cards is raised or scrapped entirely. At this point, the need to press a four-digit PIN for purchases over £100 gives people a timely reminder of how much money they're spending, minimizing the possibility of debt-fuelled purchases. The UK's financial regulator suggested that banks and card providers set their own limits or be able to completely ban them entirely earlier this week. That would make joining a PIN even more unusual. Consumers should be able to set their own contactless limits, according to banks and some BBC readers, as the discussion about the issue picks up ahead of a final decision later this year.
Reckless or over-regulated?
For millions of people around the world, contactless payments have become a part of everyday life. When they were first introduced in the United Kingdom in 2007, the transaction ceiling was set at £10,000. Since then, the threshold has risen steadily, to £45 in 2020 and then to £100 in October 2021. They contributed to rises in the average contactless expenditure. The average will rise as a result of increased demand, greater value, and the possibility of buying without a PIN could be made contactless. However, what is much harder to quantify is how people were spending more often and in larger amounts than would have been the case if they had to enter a PIN. According to Richard Whittle, an economist at Salford Business School, the added convenience for customers can come at a price.
the author says,If this ease of payment leads to consumer spending without considering,
real and immediate feedbackthey are more likely to buy what they don't really want or need. This could be a problem with credit cards, according to him, because people are spending borrowed money and building debt. Regulators should decide whether contactless credit cards have different limits than contactless debit cards, according to him. Cash gives
critical friction pointon how much money you have, according to Stuart Mills, a lecturer at the University of Leeds, while a PIN is a
for monitoring spending.Removing such frictions, while offering some convenience features, is also expected to see many more people realize they've spent an awful lot more than they ever intended to,
gives me a little bit of a warning to ensure I'm not overspending on my tap-and-google. However, many people are finding that they are rarely spending more than £100 in one go anyway, which has become the exception for many. According to Barclays' study, nearly 95% of all eligible in-store card transactions were contactless in 2024. Terezai Takacs, a florist in Sevenoaks, claims that over the past two years people have cut back on spending, such as asking for smaller bouquets.he says. Both these scholars have expressed reservations before, but this is not limited to a theoretical argument. Robert Ryan, a Kent market shopper, told the BBC that entering a PIN
Technology takeover
Ms Takacs also points out that the overwhelming number of clients now pay via mobile wallet on their smartphones is now. Due to in-built extra safety features such as thumbprints or face ID, paying this way has an indefinite payment limit. Dr Whittle says that raising the contactless card limit on spontaneous, or reckless spending is likely to deter the effect of raising the call center limit on impulsive, or irresponsible spending, because young people, in particular, are paying by phone. According to some, eliminating the contactless card limit is overdue because it is much less relevant when people are used to PIN-free spending on a phone.
Hannah Fitzsimons, chief executive of fintech firm Cashflow, says.Regulators are finally catching up with how people pay,
If the contactless card limit were to rise or be scrapped, it would push the UK further into Europe than much of Europe,Digital wallets on smartphones have no boundaries, so why should cards be held in the past?
any reforms will be made thoughtfully with safety at the center.the UK's tweeps are said, as well as those in other advanced economies. The indUStry in Canada sets the level rather than regulators, and it is set by providers in the United States and Singapore, a model that the Financial Conduct Authority (FCA) intends to imitate in the UK. Banks comply with the regulator, although UK Finance, the industry trade body, says
Personal choice
Customers will be able to set their own thresholds or completely ban contactless on their cards, according to bank and card providers who do change limits.
Lloyds Banking Group's payments director, Gabby Collins says:Our customers can now set their own contactless payment limits in our apps in £5 steps, up to £100,
Any BBC readers, viewers, and listeners who contacted us about this issue via Your Voice, Your BBC News have all supported this option.Lloyds, Halifax, and Bank of Scotland customers can even set their personal contactless payments limits in their applications, and we're certainly committed to keeping the flexibility.
Ben, 36, of London, told us. I would like to set my own personal record. "It is my card and my pick based on convenience and risk tolerance. Some banks do not allow for this. This option must be available to everyone. Others are worried about safety, fearing that unlimited contactless cards will become more of a threat to robbers and fraudsters.The most significant element here is personal choice,
'Limitless abuse'
Charities have warned that not everybody has the technological skills to set their own limits. In other situations, it can have a huge effect on people's lives. Unlimited contactless cards, according to Sam Smethers, chief executive of Surviving Economic Abuse, provide the opportunity for limitless economic abuse to controlling parties.
she says.Unlimited contactless spending could give abusers free access to drain a survivor's bank account without checks or alerts,
She warns that it may also hasten the transition to a cashless society. Many people are survivors who are in need of cash, so it was the only way to avoid robbers who can track online transactions, withhold bank cards, and close down bank accounts, according to her.This could leave a survivor homeless and secure, while also pushing them even deeper into debt.
