The limit on contactless payments is set to more than double this year, the government has said.
The changes, being set out in the Budget announcement on Wednesday (3 March), will see the legal single contactless payment limit raised from £45 to £100.
Increase won’t happen immediately
While the change will be legally in force from 3 March, the payment increase will not be implemented immediately, as firms will need time to make system changes.
The banking industry is due to implement the new £100 limit later this year.
The government has said the increase has been made possible by the UK’s exit from the European Union which means it is no longer bound by EU rules on the maximum limit for contactless payment. This is currently set at a limit of £45 in Europe.
In 2007, “tap and go” contactless cards initially had a limit of £10, but this was later increased to £15 in 2010, followed by £20 in 2012 and £30 in 2015.
The £45 limit was introduced in April last year, in the early months of the Covid-19 outbreak.
Speaking about the change, Chancellor Rishi Sunak said: “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.”
An end to physical cash?
The announcement could further accelerate the decline in use of physical cash, with banknotes and coins having already been shunned due to the coronavirus pandemic.
However, a study from the Bank of England last year indicated that the risk of catching coronavirus from banknotes is low.
The government has pledged to legislate to protect the future of cash in light of the growing use of contactless payments.
The Financial Conduct Authority (FCA) held a public consultation on contactless limits and recommended the change.
Eight out of 10 UK adults used contactless payments in 2019, and the increase in contactless limits will mean millions of payments will now be made simpler, the government has said.