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Will the £100 contactless limit mean a fraudster spending spree?

Millions of Britons are worried about fraudsters potentially racking up a several-hundred-pound spending bill on a lost or stolen card ahead of the increase in the contactless limit later this year, new research suggests.

Two-thirds of people are worried about contactless fraud on their bank cards if they lose them, according to research from Zopa, with 46 per cent of those surveyed having misplaced one in the past.

And the survey of 2,000 adults found 30 per cent of those who had lost their card had money stolen through contactless fraud before they cancelled or froze it.

Victims lost £40 on average.

Some 46% of Britons admitted to losing their bank card at some point, 30% of whom had money stolen through contactless fraud before cancelling it 

Although contactless fraud fell last year for the first time on record, to £16million, a combination of easing lockdown restrictions and the upcoming upping of the tap and pay limit to £100 could see it rise.

The new single transaction limit of £100, and the higher limit of £300 worth of payments which can be made in a row without a Pin, will come into effect later this year after it was announced on the morning of the 3 March Budget.

Chancellor Rishi Sunak appeared to be banking that consumers, who have increasingly adopted contactless payment methods over the last 14 months, would help spend the UK economy out of its pandemic-induced recession.

However, the banking industry appeared lukewarm on the announcement, with some card providers wanting more checks and limits to be introduced and others even suggesting the higher limit was unnecessary.

In response to the research from Zopa, digital bank Starling said: ‘Our customers are increasingly using mobile wallets as a preferred payment method over contactless payments by card.

‘Starling customers are three times more likely to use their mobile wallet than to pay with a contactless card transaction, especially given the higher limits and added security this affords them.’

Mobile wallets like Apple Pay do not have single or cumulative transaction limits as purchases must be authenticated each time, such as by using a fingerprint.

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The bank had previously said it would allow customers to opt out of the higher limit if they wanted to. 

Some of Britain’s major banks were reportedly urging the Government to stagger the increasing of the limit to £100 and cap the number of payments which could be made in a day to prevent fraud.

However, it is understood there a single limit is likely to be introduced.

Andrew Hagger, the founder of personal finance site Moneycomms, previously told This is Money: ‘I wondered if banks would increase the forced Pin input to maybe once every three transactions.’

A Pin has been required after five contactless payments since September 2019, while the current cumulative spending cap is £130.

Rishi Sunak announced the contactless limit would be upped to £100 on the day of the Budget

Rishi Sunak announced the contactless limit would be upped to £100 on the day of the Budget

He added: ‘If you are more than doubling the contactless limit then surely there will be a similar increase in the level of fraudulent activity, assuming no additional security precautions are introduced.’

Contactless fraud accounted for just 2.9 per cent of the £574.2million lost to card fraud last year, according to the latest figures from banking trade body UK Finance, and the £16million loss accounted for just 1.8p in every £100 spent through contactless payments.

However, losses were somewhat limited by the fact consumers were unable to go out and spend for large portions of 2020.

‘The fall in contactless fraud losses was in part due to the reduced opportunities for fraudsters to commit these types of scams’, UK Finance said.

And even losses tend to be reimbursed in these instances, banks have increasingly introduced measures to help those 46 per cent who have misplaced their plastic and the 67 percent worried about having money stolen on a contactless-enabled card.

Most banks including the likes of Starling and Zopa, which launched a credit card late last year after it obtained a banking licence, now offer customers the ability to freeze their card if they lose it, or even fully disable it for physical transactions.

Britain’s biggest bank, Lloyds, said: ‘Helping to keep our customers’ money safe is our priority and we are working behind the scenes 24/7, investing millions in our fraud defences and enhancing functionality to give customers extra peace of mind, such as card freezing and cancellation tools. 

‘As the country opens back up after lockdown, this will likely be reflected in consumer spending and contactless payments which are already used widely will continue to offer greater flexibility and choice.’

UK Finance added: ‘Always report lost or stolen cards to your bank or card company straight away. Customers can put a temporary freeze on their account through their bank’s mobile app, online banking, or over the phone.

‘Check your statements regularly and if you spot any payments you don’t recognise, contact your bank or card company immediately.’

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