Contactless card payments have taken over the world of physical shopping since they were introduced way back in 2007.
In 2021, contactless payments accounted for 27% of all card payments in the UK, according to UK Finance, and that number will have increased since.
The contactless limit in the UK currently sits at £100 having steadily risen over the years, giving people plenty of opportunity to buy relatively expensive goods with the tap of a card (or the tap of a phone).
However, that doesn’t mean you can go tapping your cards to your heart’s content – there are rules in place to prevent excessive card tapping, whatever the cause.
The key blocker in place to stop this happening is the contactless payment threshold – but what is it, how does it work, and does it really matter to consumers and businesses? Or is it just another pointless tool?
Let’s take a look…
What is the contactless payment threshold?
The contactless payment threshold is the amount you’re able to spend across several contactless purchases before the card machine prompts you to enter your pin.
Currently, the contactless payment threshold in the UK sits at £300. Meaning if you spend more than £300 across numerous contactless buys in a short space of time, the next time you try to make a purchase, the card machine will ask you to insert your card and enter your pin number.
What is the purpose of the contactless payment threshold?
When contactless card payments were first introduced, there was a lot of scaremongering around the thought that a thief could simply pick your card from your pocket and go off on a wild spending spree, with absolutely nothing you can do about it.
Of course, this is hardly the case. Even if a thief stole your card and spent your money, your bank will have measures in place to cover such losses, so nothing will be held against you personally.
Having said that the contactless payment threshold still comes in handy in certain scenarios:
In 2022, there were almost 300,000 incidents of lost or stolen cards being used to make illegal transactions, according to Money.co.uk. This doesn’t sound like much in comparison to the almost 3 million instances of plastic card fraud though (when the data of the card is stolen, not the physical card itself) which can cause significant problems for card owners and their banks. Thankfully, if the physical card is what’s compromised, the contactless threshold is in place to help stop criminals from taking advantage of you.
Yes, thieves can steal your credit and debit cards and spend without your knowledge. And yes, you won’t be held liable for such losses if the card was taken without your knowledge or consent, but it still helps a great deal to know that should a thief run off with your card, he or she won’t be able to spend a fortune in your name.
For example, if a thief chose to steal your card and began spending to their heart’s content, they’d be limited to using contactless card payments because they don’t know what your pin number is. And because the contactless threshold is set at £300, this is the absolute maximum they’d be able to spend before the card was rendered completely useless to them.
At face value, this is helpful to the consumer as it means a thief can’t spend a ridiculous sum of money that belongs to the owner of the card – especially if that card is a debit card and not a credit card.
But it also works in the favour of the banks, too. Because of the £300 limit, banks and insurance companies are safe in the knowledge they would not need to shell out large sums of cash to cover losses made as a result of such theft. If the threshold was a lot higher, or if there was no threshold at all, this could result in banks and insurance companies needing to take on a lot more work, time and effort in covering the funds.
The same goes for law enforcement – if a thief attempted to go on a spending spree with a contactless card and there was no contactless threshold in place, they’d be able to spend vast sums in as many locations as they wanted before the card was ultimately locked by the bank.
This would result in a lot of legwork for the authorities, who would need to identify and log any spending that happened without the card owner’s consent, which could be a long and tiresome process, especially considering they would also need to differentiate between legitimate card payments made by the owner and payments made by the thief.
But because of the contactless threshold, the work required of law enforcement agencies would be minimal in comparison, because the thief could only spend a limited amount, which also cuts the likelihood of him or her spending the victim’s cash in different places.
It’s reasonable to assume that the ease with which something can be done means more people will be inclined to do that thing, in almost any area of life. But this is perhaps most relevant in one specific area than any other – spending.
Contactless payments have undoubtedly made spending a less stressful, less time-consuming and more lackadaisical experience requiring virtually no effort whatsoever in comparison to the classic chip-and-pin method. This is why so many people feel more inclined (a lot of the time unknowingly) to spend more via contactless than they otherwise would have.
In an interview with The Guardian, Stacey Lowman of the financial coaching app Claro said the feeling of freedom contactless payments provide makes it easy for people to lose track of how much they’re spending and removes some of the accountability spenders used to feel at the checkout:
“As you don’t even have to hand over your bank card, the sense of financial loss, otherwise known as the pain of payment, isn’t felt nearly as much as with cash, or even a non-contactless card.”
But the temptations of overspending go beyond the simple action of tapping a card. The reasons why some people overspend are wide-ranging, but can often be boiled down to a few key points.
28% of British men who overspend do so for fear of missing out on good times with their chosen social groups, while 31% of them do it to prevent making the impression they’re unable to afford the same luxuries as their friends, according to research conducted by card company Aqua.
Either way, the contactless payment threshold prevents people from overspending to a degree.
Even if excessive spending was less laid back and more intentional, the act of having to stop and put your card into a machine when you hit a certain point can act as a “circuit breaker” in the mind of a spender, reminding them they should probably call it a day.
Psychologically, this may work similarly to some gambling websites, which flash messages on-screen when a player may be spending beyond their means, has spent an excessive amount of time playing or appears to be spending a lot of cash in a short period.
Contactless card security and spending protection measures have never been stronger
This might all sound a little “doom and gloom”, but the fact is that card payment safety measures – both on behalf of the business and the consumer – have never been stronger.
Thanks to rock-solid encryption – contactless card machines with in-built rugged security – the chances of card data being stolen during the point of sale are very slim, so customers can shop with confidence and businesses can serve them with peace of mind.
Plus, if overspending was ever an issue for someone, beyond the contactless threshold many banks now have protective measures in place on many of their banking apps – including warnings about spending and alerts on potential fraud – to prevent people from spending too much, in the wrong places, in worrisome ways.
The bottom line is: Contactless card payments are here to stay and they are, in so many ways, the safest way to pay today.