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Understanding the Contactless Limit Rise

Written on 04 Sep 2015

September 2015 heralded more than the slow descent to Autumn and Winter; there was a big announcement regarding a change to UK contactless limits.

This announcement was muddled in with the UK launch of Apple Pay back in July, and Apple were very keen to work with retailers who would be able to commit to a higher value contactless limits to bolster the Apple Pay in-shop experience.

General - and even retail - press have been highlighting the contactless limit is going up to £30 per transaction.

What doesn’t seem to be getting much coverage is that the contactless limits are now up to the retailer to decide. In order to take advantage of the new £30 - let’s call it a “new safe limit” - retailers need to update their card machine software (which is rarely a straightforward feature).

Any mid to large retailer is actually now in a position to define their own limits. It’s likely that £30 is being forced through for smaller retailers who aren’t in a position to a direct customer relationship with their card machine provider, but those with closer ties can set the limit to whatever they want.

Payment processors are demonstrating an increased confidence in contactless payments (or prepared to underwrite a bigger risk), so it’s hard to understand the limit only moving to £30; how many more transactions will really covered by the extra £10? It seems hardly worth the fuss unless you’re going to introduce a step change in acceptance such as paying for your weekly shop, a family meal or retail-therapy-satisfying splurge.

I suspect the bigger challenge here is consumer confidence in contactless on larger transactions, and also how you reliably communicate with the UK population that the limit has gone up. That said, Visa’s new mandate that all cards issued from December 2016 must be contactless seems to be at odds with lower confidence.

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