What the £100 contactless payment limit means for your business

March 26, 2021

Did you know the number of contactless payments accounted for 88.6% of all card transactions in 2020?

That’s approximately 9 out of every 10 transactions!

Contactless payments are getting more and more popular by the day, which is why this year the contactless limit is set to increase from £45 to £100.

The contactless limit increase was recently announced in the 2021 UK budget in March by the Chancellor of the Exchequer, Rishi Sunak. As a business owner, it’s likely you’re now wondering what this contactless limit could mean for your company.

We’ve put everything you need to know in one page:

  1. Why is the contactless payment limit increasing?
  2. What is the maximum amount for contactless payment in the UK?
  3. Will it increase the rates of fraud?
  4. What does the contactless limit increase mean for my business?
  5. Taking payments up to the contactless payment limit with Pomelo Pay

Why is the contactless payment limit increasing?

Since its launch in 2007, the limit for contactless payment in the UK has grown steadily from £10 to £30.

In April of 2020, the contactless maximum was raised to £45 to accomodate for the growing concern over the hygiene and safety of cash handling.

Contactless technology makes it easier to complete socially distanced payments and also makes payments a lot faster, easier and seamless for customers.

This further accelerated the growing movement of digital payments. Many businesses even stopped accepting cash and completely embraced card payments.

There are two key reasons that drove the contactless limit increase:

  1. Convenience
  2. Stimulation of the economy

Since contactless payments integrate easily with online banking, many of us prefer to tap and go. All that time counting coins or inputting a PIN is now spent doing more useful activities. It’s no wonder no one wants to go back!

And secondly, a big part of 2021 will be focused on the economic recovery of the UK. A higher spending limit will encourage the public to spend even more than usual, helping businesses recover more quickly.  

What is the maximum amount for contactless payment in the UK?

Later this year, as published in the 2021 budget, we’ll see the contactless payment limit increase to £100 per transaction.

The new guidelines will also increase the amount eligible to spend until a pin is required. Currently, buyers are asked to input their PIN after five consecutive transactions, or when the total spend is £130. Once implemented, the new limits will be £300 before buyers will be asked to input their PIN.

Will it increase the rates of fraud?

According to UK Finance, contactless fraud currently sits at 2.5p for every £100 spent - which is very low.

Although there are concerns that the new contactless limit could increase the rate of fraud, there wasn’t a fraud rise recorded in the last increase in 2020, when the limit went from £30 to £45. The total value of reported fraud equated to only 0.02% of the total amount spent using contactless cards since April 2020.

Contactless payments that use Apple or Google Pay also ask for additional verification (e.g. fingerprint) prior to confirming the transaction and therefore adding security to your purchase.  

Learn more: Is Google Pay Safe?
Learn more: Is Apple Pay Safe?

What does the contactless limit increase mean for your business?

Faster payments

The contactless payment limit increase may mean that many of us will barely use chip and pin terminals when completing a purchase. There won’t be any more fiddling with buttons, so we’ll be able to pay for our items with just a tap.

As a business, contactless payments will drastically reduce the time it takes for you to accept payments. Although it may just seem like minutes, the time really does add up.

Find out how Pomelo Pay can help you speed up payments

Which is why it’s such a gamechanger for the hospitality industry. As our CEO, Vincent Choi, recently quoted in a Finextra article, restaurants utilising contactless will be able to serve more diners within the same timeframe - which will help with the recovery from lockdown.

Fewer queues also mean customers have a more positive experience. This could lead to higher retention, better reputation and more referrals.

Essentially, faster payments means a smoother and more enjoyable customer experience.

More card payments

Cash makes up 23% of total transactions in the UK, and as historical trends show, usage will only be decreasing.

Think about it: how often do you find yourself with cash in your wallet? With more people making contactless payments than before, fewer people have cash on them.

If you manage a business that doesn’t accept card payments, you risk missing that sale or a returning customer: people will prefer to pick a shop that offers contactless payments over heading to an ATM to take out cash.

We understand that card payments aren’t always great: transaction fees are high, card readers are complicated to set up and chargebacks are an absolute nightmare.

That’s why we believe QR code payments are a great alternative option for businesses that want to accept card payments with a system they’re already familiar with: a smartphone.

Find out more about Pomelo Pay’s simple fee structure that doesn’t require any additional hardware to get started: Pomelo Pay pricing

Read more: Why QR code payments are good for business

Higher digital spend

Did you know that, globally, the average spend increases by 450% when paying by card rather than cash?

You’ve probably experienced it yourself: when payments become frictionless, you quickly see yourself happy to spend a lot more than normal (although your bank account doesn’t get too happy).

When purchases are just a tap away, friction goes down and spending goes up.

Although it may not be so good for your bank account, it’s great news for businesses. If you accept contactless payments, your customers will be likely to spend over 30% more!

With everyone getting more used to digital payments, cash disappears from the equation: customers can pay directly with their card, and businesses receive their sales directly into their bank accounts. It’s a lot easier and simpler to manage.

Taking payments up to the contactless payment limit with Pomelo Pay

What does the £100 contactless payment limit mean for your business? To summarise:

If you accept contactless payments, the smoother payment experience and higher spend limit will likely translate into more customers and therefore higher revenue.

However, businesses that don’t accept card payments may be negatively affected by the limit increase. With more customers switching to digital spending, it’ll be even harder to close that sale!

Accepting contactless payments can be the difference between a new customer or no customer at all. We recognise more services are adopting contactless payments and there is a demand for convenience, which is why we’re launching our Tap to Pay feature that allows businesses to accept contactless payments with just their phone.

With Pomelo Pay, businesses can use their smartphones to accept all types of debit and credit card payments, whether it’s with QR codes, payment links or contactless. And since businesses don’t need to purchase additional hardware, card payments become a lot more affordable.

With Pomelo Pay, all you need is our app and you can accept card and contactless payments. No terminal, no maintenance, or monthly fees - you only pay when you make a sale.

So… is your business ready ‘tap’ into its share of the market? 😉