Does the £30 contactless limit spell the end of traditional payments?

08 September 2015

Forget mobile wallets – when it comes to disruptive payment methods, you’d have to go a long way to find one more revolutionary than contactless.

In the past couple of years, contactless transactions have grown exponentially, spurred on not only by their wider adoption for retail purposes, but by their introduction across many transport networks.

In September, the spending limit per contactless purchase was raised to £30: could this be a nail in the coffin for the chip and PIN card?

There’s certainly a move from financial organisations towards contactless capabilities, as MasterCard has introduced a mandate requiring all new card terminal implementations from 2016 onwards to feature ‘tap and go’ technology. By 2020, all retailers must have contactless live.

What’s interesting is the knock-on effect of wider contactless promotion. The majority of contactless-compatible payment solutions also support NFC payments, through which Apple Pay (and other mobile wallets rumoured to be launching soon) processes transactions.

Where mobile payments differ to card-based transactions is that supports High Value Contactless (HVC). This means that, by validating their identity through their mobile device, consumers can make purchases in excess of £30.

The increasing adoption of low value contactless payments should also speed up consumer appetite for HVC payments. Some shoppers perceive contactless cards to be weak, as they can be read using a suitable proximity reader, without consumer initiation – creating the risk of cloning.

Mobile-based HVC transactions are as quick as contactless cards, but offer greater security, as the consumer is in control of when their data is exchanged. They will also be of great appeal to customer shopping for big ticket items, as they can enjoy a frictionless checkout experience through their mobile device.

Plus, with the wearable technology market set to explode in coming years, we could see a time where debit cards gather dust in consumers’ wallets, replaced instead by smart devices. This reality may seem like a way off, but retailers and hospitality vendors slow to embrace the future of payments could see themselves being left in the shadow of forward-thinking rivals. 

Does the £30 contactless limit spell the end of traditional payments?

Forget mobile wallets – when it comes to disruptive payment methods, you’d have to go a long way to find one more revolutionary than contactless.

In the past couple of years, contactless transactions have grown exponentially, spurred on not only by their wider adoption for retail purposes, but by their introduction across many transport networks.

In September, the spending limit per contactless purchase was raised to £30: could this be a nail in the coffin for the chip and PIN card?

There’s certainly a move from financial organisations towards contactless capabilities, as MasterCard has introduced a mandate requiring all new card terminal implementations from 2016 onwards to feature ‘tap and go’ technology. By 2020, all retailers must have contactless live.

What’s interesting is the knock-on effect of wider contactless promotion. The majority of contactless-compatible payment solutions also support NFC payments, through which Apple Pay (and other mobile wallets rumoured to be launching soon) processes transactions.

Where mobile payments differ to card-based transactions is that supports High Value Contactless (HVC). This means that, by validating their identity through their mobile device, consumers can make purchases in excess of £30.

The increasing adoption of low value contactless payments should also speed up consumer appetite for HVC payments. Some shoppers perceive contactless cards to be weak, as they can be read using a suitable proximity reader, without consumer initiation – creating the risk of cloning.

Mobile-based HVC transactions are as quick as contactless cards, but offer greater security, as the consumer is in control of when their data is exchanged. They will also be of great appeal to customer shopping for big ticket items, as they can enjoy a frictionless checkout experience through their mobile device.

Plus, with the wearable technology market set to explode in coming years, we could see a time where debit cards gather dust in consumers’ wallets, replaced instead by smart devices. This reality may seem like a way off, but retailers and hospitality vendors slow to embrace the future of payments could see themselves being left in the shadow of forward-thinking rivals.