Wednesday, 27 Oct 2021

Rishi Sunak explains the change to contactless payment that will affect everyone in the UK

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Contactless payments provide an additional avenue to reduce Covid transmission. Over the last year, people have successfully avoided touching card machines – amongst the highest contact surfaces on the high street – with limits increased to £45. The Chancellor will soon change the limit again, but it won’t go the same way as other Covid-era policies.

Mr Sunak will soon expand on the contactless policy he introduced earlier this year.

The limit will rise again from next week as ministers try to entice Brits into spending.

In a bid to crowd consumers into shops, the Government will allow a contactless payments up to £100.

People can start wielding their newfound power from October 15, more than a month after the initial announcement on August 27.

The move won’t affect Apple or Google Pay users, who can use contactless services without a limit.

Retailers can, in theory, start accepting higher contactless payments by then, but it may take slightly longer.

Chip and PIN terminals will require updating before they can accept increased contactless limits.

Consumers should therefore keep in mind that not every shop will have the capability by next week.

The Chancellor said the incoming change would help people “get back to the high street” and make “millions of payments” more straightforward.

His plans make up the latest push from the Government to keep consumers on the high street.

Spending fell dramatically during 2020, dropping from £360,000 million at the start of the year to £280,000 million by mid-July.

After briefly recovering in late 2020 to roughly £330,000 million, it collapsed again in the new year to £310,000 million.

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Since then, climbing back to the early January peak has proven slow going, with the latest quarter estimations showing it has recovered to just above the £300,000 mark.

The contactless uplift should increase people’s willingness to spend money, pushing up spending and putting the UK in a more secure financial position.

But it could also open consumers to a litany of potential dangers.

Chief among them is theft, as those taking advantage of a stolen card can now spend more of their victims’ money.

The move could also come with a risk for those with debt issues.

Speaking to the Guardian following the announcement last month, Laura Suter, the head of personal finance at the investment firm AJ Bell, said it could lead to more absent-minded purchases.

She said higher contactless limits reduce the need to think critically about spending.

The new limits could mean people already in debt may find it easier to”rack up larger bills on a credit card”.

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