The bad old days of carrying cash are almost behind us. The problems of being short changed, pickpocketed or having your cash eaten by the dog are over – but now the contactless revolution is bringing some new problems as well as advantages.
At Continuum we are looking at the new contactless limit of £100 and whether it is a criminal’s dream.
The convenience of tapping a card to pay, rather than fumble with cash or even poke at a keypad – let alone signing your name – has been a long time coming.
Contactless technology was introduced as a simple way to make quick, small purchases like a sandwich or a round of drinks. But the initial £10 spending cap has been repeatedly increased since these cards were launched in 2007.
The limit was increased to £20 in 2012, to £30 in 2015 and then to £45 in 2020, in response to the Covid-19 pandemic. These transactions have become so popular that now one in three card payments is contactless. There are an estimated 112 million contactless cards issued in the UK.
Every contactless card has a small chip in it that emits radio waves when it is powered up by a card reading machine. To pay for something, you hold the card near a payment terminal, the terminal emits an electromagnetic field and only when a card enters this field it is powered ‘on’. The chip and the reader communicate with each other using an encrypted language to conduct a coded data transfer with your bank.
Contactless technology allows for payments to be made with a simple tap, without any further checks such as a PIN. Contactless cards make it very easy to buy small everyday items quickly, saving time for retailers and shoppers alike.
But they are also easier for thieves to use the card if it is lost or stolen, especially if a victim has not yet noticed and told their bank.
The limit increase puts more of your cash at risk
Of course, where there is money, even if it is in electronic form, there is also the potential for theft.
There are several ways of stealing money from a contactless card. Some are really only known by criminals and banks, but they include skimmers, which are electronic devices capable of activating a card and stealing its details, possibly while it is still in your pocket. Someone would probably have to be uncomfortably close to gain your card details, but the possibility exists that criminals might have access to powerful devices which work at a distance.
This might make it possible to siphon money straight out of your account.
The other known problem is simply the familiar one of fraud, where a criminal obtains your details and uses them to order goods online.
With the limit on contactless transactions being increased to £100, it is natural to worry that more of your money is at risk.
Fortunately, whatever the contactless limit, you can take some simple steps to minimise the risk of card fraud.
Never hand over your card. If your card is taken out of your sight someone could run it through a skimming device, which copies the data from its magnetic strip.
Don’t keep cards in pockets or bags where they are visible. Old fashioned card theft is still one of the most common causes of loss.
Get a receipt. Contactless users aren’t always offered a receipt, so if you want to keep track of spending and make sure you aren’t being overcharged, you may need to ask for one.
Check your statements. Look for unusual transactions, including on lost or stolen cards as these can still be used after being cancelled. If anything looks suspicious, ring your bank or card provider.
Get a card shielding case. The chance of being skimmed may be small, but it is possible, and a case which prevents the card being electronically read may be a simple precaution.
Set your own limit. If you don’t need to spend up to £100 contactless, many banks will let you set your own limit. Some, like NatWest, will even let you turn contactless functionality off using their app.
Other ways to manage your money
At Continuum we can find better ways to manage all your finances, not just the cards in your pocket. Whether it is helping sort out your everyday budgets by finding better deals on your insurance or your mortgage, or long term planning to help you build your wealth for the future, we are ready to help.
The Financial Conduct Authority does not regulate deposit accounts.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.