The rules around contactless payments are to be changed in The Budget today with the limit raised to £100, Chancellor Rishi Sunak has said.
Speaking to the Evening Standard, Mr Sunak said: “London’s retail sector is famous across the world, with Oxford Street, Covent Garden and Westfield seen as global destinations for shopping.
“As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the capital.”
Since the limit for contactless card payments was raised from £30 to £45 last April at the start of the coronavirus pandemic, people have increasingly made use of contactless payments, the Financial Conduct Authority (FCA) said.
The FCA said: “It’s important that payments regulation keeps pace with consumer and merchant expectations.”
Increasing the contactless payment limit may hasten the demise of cash use, although the Government intends to legislate to protect access to cash.
Some retailers have encouraged shoppers to pay by card rather than cash during the pandemic, although a recent Bank of England study found the risk of catching coronavirus from banknotes was low.
The current £45 limit is three times the amount it was a decade ago.
“Tap and go” contactless cards initially had a limit of £10 in 2007, and this was increased to £15 in 2010, £20 in 2012 and £30 in 2015.
Gareth Shaw, head of money at Which?, said: “Raising the contactless payment limit will be helpful for those who are comfortable managing their money digitally and is further demonstration of the banking industry’s acceleration towards cashless payments.
“However, the focus cannot solely be on making things more convenient for those that can benefit from developments in payment technology. Millions of people still rely on cash to pay for essential products and the cash network needs to be protected for them, as the rapid pace of cash machines and bank branch closures shows no sign of slowing down.
“Legislation needs to be introduced by the Government as soon as possible to safeguard access, while the regulator must track cash acceptance, as legislation will be undermined if there is nowhere to spend it.”
A spokesman for trade association UK Finance said: “Contactless payments are increasingly popular, with many customers taking advantage of the higher £45 spending limit introduced by the banking and finance industry last year.
“The industry believes that a more flexible approach could be merited in future, which takes into account consumer demand, fraud prevention, security and convenience. UK Finance looks forward to seeing more details from the FCA on its proposals and will respond to its wider consultation on this issue in due course.
“Contactless is one of a range of payment methods and the industry will also continue to work closely with the regulator to ensure that customers can pay in a way that suits them.”