Contactless payment limit will rise from £45 to £100

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Contactless payment limit will rise from £45 to £100 in bid to boost economy after lockdown – but banks warn of increased fraud risk

  • Rishi Sunak is set to increase the contactless payment limit from £45 to £100
  • The limit was last increased from £30 to £45 at the start of the Covid pandemic
  • Banks have said they may allow customers to opt out, amid concern over fraud 

By Luke May For Mailonline

Published: | Updated:

Contactless payment limits will rise from £45 to £100 in an attempt to boost the post-lockdown economy – but banks have warned it increase the risk of fraud.

Ahead of his Budget announcement later today, Chancellor Rishi Sunak said the cap was set to more than double, ahead of shops reopening in April. 

The increase comes less than a year after the limit was increased from £30 to £45 to as a way of encouraging shoppers not to use cash during the early months of the Covid-19 pandemic.  

Contactless payment limits are set to rise to £100 this year – but some banks say they will give customers the option to opt out, amid concerns over fraud

The Treasury believes the hike could help boost retail sectors, including London’s, which is worth more than £31billion.

According to the Evening Standard, the change was only made possible by Brexit, as the European Union places a cap on member state’s contactless limit.

Mr Sunak told the paper: ‘As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the capital.’

The increase is not due to set in until later this year, but it will bring Britain in line with the US, Canada and Australia, where limits range from between £100 to £145.

The increase is possible after Brexit, as the European Union sets a cap on its member states. Speaking ahead of the Budget this afternoon Chancellor Rishi Sunak said the announcement would 'protect jobs and drive growth'

The increase is possible after Brexit, as the European Union sets a cap on its member states. Speaking ahead of the Budget this afternoon Chancellor Rishi Sunak said the announcement would ‘protect jobs and drive growth’

Money stolen through contactless payments is refunded by the banks, but the cost could come back to bite customers through higher fees.

Last month Starling Bank told The Times it would give customers the chance to opt out of a £100 cap.

A spokesperson said it would ‘strongly recommend that a system is introduced where customers have to authenticate higher payments to limit fraud exposure.’

FROM SWIPING TO TAPPING: EVOLUTION OF PAYING BY CARD 

While the first credit card was introduced in the 1960s, it would take another 20 years for debit cards to arrive and become part and parcel of every day life.

1987: Barclays becomes the first British bank to launch a debit card. It is released with a magnetic strip on the reverse of the card, along with a hologram for security. Users would swipe the card and then sign afterwards.

2003: Chip and PIN cards are introduced. Cards were created with microchips that were deemed more secure than magnetic strips, while customers had to use a four-digit PIN number to authorise their payment.

2007: Contactless payment cards begin to hit the market, with spending capped at £10.

2010: The limit is increased to £15.

2012: It is increased again, to £20.

2015: The cap rises to £30. 

2020: Covid-19 measures see the limit rise to £45 as a way of encouraging shoppers not to use cash.

2021: Rishi Sunak announces the spending limit will rise to £100.  

The announcement comes ahead of Mr Sunak’s budget, which will see furlough extended until October.

In a crucial Budget that could set the country’s path for years to come, the Chancellor will go big by extending the £53billion scheme for an extra five months, as well as keeping self-employed and business bailouts.

The £20-a-week boost to Universal Credit is expected to stay for another six months, alongside VAT and business rates breaks for hospitality, leisure and tourism. And there will be efforts to get people shopping, including raising the contactless payment limit from £45 to £100.   

But as he unveils tens of billions of pounds more spending – on top of the £280billion already shelled out by the Treasury – Mr Sunak is also likely to deliver a stark message that the largesse cannot continue.  

He has indicated there will be a plan for repairing the devastated public finance with a tax reckoning, as the Government faces a £2.1trillion debt.  

Alongside the financial package the government’s OBR watchdog will provide a critical assessment of the economy’s prospects, with hopes that the swift vaccine rollout might have slashed the black hole that needs to be filled with tax rises and spending cuts below the eye-watering £40billion some experts feared. 

A Tory civil war is raging over the prospect of tax hikes, with senior figures such as Lord Hammond and Lord Hague saying action must be taken to balance the books but others warning it will strangle the recovery.

The respected IFS think-tank said this morning that there should not be any tax rises this year, while former OBR chief Robert Chote said the UK was in a ‘period of battlefield medicine for the economy’ and the deficit should not be tackled ‘too aggressively’.  

Mr Sunak will address the Cabinet this morning on the contents of his Budget, before announcing the measures to MPs at 12.30pm. But he has come under fire from Speaker Lindsay Hoyle for pre-briefing and his slick PR drive, including ‘rushing off’ after the Commons statement to take a press conference in No10.