By: Jean-Michel – chief technology officer at Total Processing.
The UK’s contactless payment limit has just increased by more than half, from 45 pounds to 100 pounds. For many small businesses, this presents an opportunity to offer something new for customers. The increased limit will allow people to pay for higher value transactions such as a family paying for their weekly food shop or filling up their car with fuel.
For small business owners, the news is overwhelmingly positive. The limit has increased by 100% and it’s easier than ever to integrate contactless payment technology. Mobile wallets and other mobile payment systems enable SME’s to provide your customers with the option of paying through their phone or watch instead of pulling out their wallet or card.
But there’s still a question to be answered: why would people want to pay in this way when they can already pay in so many other ways?
Firstly, low-touch payments boomed during the coronavirus pandemic and experts see the trend accelerating. Contactless payments can be useful to people in two main cases. The first is the customer who wants the fastest possible way to pay. Studies show that we’re getting increasingly impatient when paying for things and we don’t like queuing. That’s why even if we have the exact change, we tend to opt for contactless payments rather than putting down our wallets and waiting for change or stopping and rummaging through our wallets to find their card.
The second case is for those customers who need to make a payment of an amount below the value of their card’s credit limit – and don’t want to carry around lots of cash.
Credit and debit cards had previously had very low limits below £20 and for security reasons, many people don’t like carrying around enough cash to pay for more expensive items. This was bad news for small business owners, as it means that they would lose out on a lot of potential business from people who can’t pay through their cards.
But the news is good for the shops and businesses that accept contactless payments. With a large contactless payment limit, they can offer customers both a quick and secure way to pay.
And in case you’re wondering: in order to take advantage of this new limit, you’ll need to upgrade your terminals and equipment. Some retailers will want to roll out terminals that support all card types – mainly Visa or Mastercard – but some will still only offer contactless payments only with Visa or Mastercard. It’s worth checking what kind of payment technology you can expect on your new terminal before upgrading it.
This increase in the contactless payment limit is also a reminder that small business owners need to stay current with the payment industry. In the UK, we’re moving rapidly towards a cashless society. Our new rules on high-value notes and our new chip and pin technology means that more and more businesses will soon be accepting contactless payments (and trying to encourage customers to opt-in).
But it’s not just convenience that will play into this trend; it’s security too. As contactless payments become more common, they’re making us less vulnerable to fraud.
Don’t be afraid to switch over to a smart card payment system that keeps you in the loop and protects your data. There’s a lot of flexibility in how you can do this – from replacing your traditional magnetic stripe card terminal with a contactless one to building an e-payment system around your current tablet device.
So now, as ever before – if you have the right equipment – it’s easy for small businesses to accept contactless payments from their customers. The contactless payment limit increase won’t change that.
Does it come at a cost of increased risk?
One of the questions that many people asked was whether the increased limit would increase fraud risk. Spokespeople for Visa and Mastercard answered, “Visa and Mastercard offer fraud protection through contactless payments at contactless terminals with chip technology”.
So, though there is some new fraud risk, this is still mitigated by the security of using Chip and PIN technology. It’s worth noting that Chip and PIN technology only protects against card skimming.
The most effective way in which this could be prevented would be if banks had to give permission for whatever action is being taken on the card or if cards had to have embedded chips that were impossible to read. However, this is not how contactless cards are set up currently.
It also stands to reason that if, for example, a person had their card stolen they may not necessarily report it at the same time as having the chip read.
The same risk stands, but it could be said that thieves may be more inclined to steal more cards now the contactless limit is 100% higher.
How can SME’s accept contactless payments?
Contactless payment terminals are now as cheap as traditional card terminals and they’re now working in tangent with mobile payment apps. This makes it easy for small businesses to upgrade to a system that supports contactless payments from any credit or debit card.
There are a number of different types of contactless card readers available. They all come with different costs and features, so you’ll need to consider your business size and industry while choosing. Contactless payment terminals can be connected to either a tablet device or mobile phone with an app, or fitted to the countertop itself, where you can accept all cards.