Exploring the Future of Contactless Payment Limits: Visa, Mastercard, and the Impact of the Pandemic

During the Financial Times outbreak of the pandemic, numerous consumers have expressed interest in whether Visa and Mastercard are planning to raise their contactless payment limits. However, this question brings us to an important reminder: the actual set limit for contactless payments is often determined by national regulatory bodies, not Visa or Mastercard themselves.

Understanding National Regulations on Contactless Payments

In an age where digital payments have made great strides, national regulatory bodies and local laws often play a crucial role in defining payment limitations and security measures. Visa and Mastercard play a significant role in facilitating these payments, but setting specific limits for contactless payments is typically within the purview of local regulatory frameworks and banks.

UK Example: An Increase in Contactless Limits

A notable example is the United Kingdom, which has already shown progress in this area. From April 1st, the limit for contactless payments in the UK will be increasing from ￡30 to ￡45. This increase has been rolled out following discussions and consultations with various stakeholders, including banks and financial institutions.

Personal Experiences and Safety Concerns

While raising contactless payment limits can provide numerous advantages, such as convenience and increased spending limits, it is important to consider the safety implications of leaving contactless devices vulnerable to increased amounts of transactions. Many consumers, including myself, are increasingly relying on contactless payments for everyday transactions. While the convenience is undeniable, safety concerns remain a significant factor in payment preferences.

Personal Experiences

For instance, many consumers prefer to pay with their phones or other personal devices, as they can avoid sharing sensitive information with others. Even if a PIN is required, the secure personal nature of the transaction can be reassuring. However, there are limitations to this method, especially during transactions at self-checkout counters. Using a 'finish and pay' button can still pose risks, and hygienic measures such as using wipes can help mitigate these risks.

What's the Difference Between Contactless and Chip?

Some readers might ask, 'If the payments are chip-based, what's the difference between chip and contactless?' To address this, chip-based payments (EMV) and contactless payments both offer different features and benefits. Chip-based payments generally provide better security due to the need for a personal authentication, such as a PIN, which can prevent unauthorized transactions. On the other hand, contactless transactions can be faster and more convenient, especially for low-value purchases.

However, contactless payments do have limitations. For one, they do not always offer the same cash back benefits as chip-based payments. For example, at grocery stores, you might not receive cash back when using a contactless card if you used it for a purchase under the limit. This is particularly true for cards that support contactless payments, where the focus may be more on increasing transaction speed and convenience rather than specific cashback or rewards programs.

Security Concerns with Hackable Cards

Another factor to consider is the increasing instances of card hacking. Despite Visa and Mastercard's stringent measures to protect cardholders, fraud can still occur. While you, the cardholder, may not be held liable in some cases, these instances highlight the need for vigilance. In such situations, avoiding contact transactions, especially for high-value items, can be a prudent choice.

Future Outlook for Contactless Payment Limits

Given the current global health situation, there is a possibility that Visa and Mastercard may reassess their policies and bring forward plans to increase their contactless payment limits. For instance, if the trend of remote and contactless payments continues to grow, it would be reasonable to expect a change in these limits.

However, such a decision would not be immediate. It would require the input and alignment of regulatory bodies, banks, and payment providers. Additionally, public education on the safe use of contactless payments is crucial. Training and awareness campaigns could help more individuals understand how to use these payment methods securely, especially the 'pay wave' or contactless features that are supported by Mastercard and other major card issuers.

While these changes may take time, staying informed and prepared is key. As payment technologies continue to evolve, understanding the intricacies of contactless payment limits and their implications will become increasingly important for both consumers and businesses alike.