Personal Finance

Are contactless payments going to kill cash?

There are fresh predictions that Britons may soon cease using cash to buy goods and services, as contactless payments surge and a new higher limit on ‘tap and go’ spending looks set to further the trend.

The BBC says card issuers have lifted the cap on contactless payments from this week from £20 to £30, as the value of transactions passes £2.5bn for 2015 so far – already higher than the whole of last year. While the Daily Telegraph notes it might be “a few weeks” until those machines maintained by shops themselves are upgraded, the move is already heralding a renewed shift to adopt the technology and The Guardian reports Sainsbury’s will offer the option by the end of this year.

The new limit is “psychologically important” as it is now higher than the average supermarket spend of £25. Smaller shops will also be forced to offer the payment method by 2020 if they wish to continue accepting card payments, with increased spend and reduced admin associated with contactless likely to result in the removal of charges for small card purchases, according to the Daily Mail.

The shift is encouraging more people to believe cards will continue to increase as a proportion of spending, having already overtaken cash earlier this year. The Financial Times cites research from Lloyds indicating a quarter of people believe they will “no longer need cash in five years”.

Standing in the way of the seemingly inexorable rise of plastic payments are stubborn security concerns, mentioned by 44 per cent of Lloyds’ respondents. Earlier this year Which? claimed to have been able to buy a £3,000 television with a card number and expiry date “grabbed” from a contactless card using a readily-available reader, prompting the BBC to reflect advice to place cards in a “foil-lined wallet”. There are also reports of “phantom” or “double” payments.

Industry figures say these incidents are rare and that the technology is safe. They point out most retailers require more information that the card number and expiry date, which are all that can be taken from a contactless card, and that the company from which you are purchasing or otherwise your bank is liable for fraudulent transactions in most cases.

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