Written by In these extraordinary times with the need for social distancing, the payments industry is raising the contactless limits across many countries in order to prevent the need to touch PIN Pads in order to pay for our essential supermarket and pharmacy shopping. Indeed, such is the concern over the use of cash that contactless payments are being actively encouraged over cash, with some countries, notably China and Russia[1] now requiring that cash is sanitised before it is allowed back into circulation.
The Dutch Payment Association[2] has moved to double their contactless CVM limit from €50 to €100, similar increases are being introduced by Poland; Norway; Canada; Turkey etc. Yesterday the British Retail Consortium[3] announced that the UK too will raise its contactless limit from £30 to £45 on the 1st April.
So why do we need to wait a week? What does it mean? What are the alternatives?
First let us explain how contactless limits work and understand the difference between contactless payments in the UK compared to most other countries. Contactless payment terminals have 3 limits:
- Floor Limit
- CVM Limit
- Transaction Limit
The Floor Limit determines if the transaction should be sent online to the Issuing bank for authorisation. In the UK the contactless floor limit has been set at £0 for some time, ensuring all transactions are sent online, preventing spend from any cards that have been reported lost or stolen.
The CVM Limit is the one which is being changed on the 1st April. Above the CVM Limit a transaction requires a cardholder PIN or biometric authentication in order to be approved, which generally means a Chip & PIN transaction is needed. We are now seeing the introduction of some biometric contactless cards, but there are very few of them in the market today. By raising the CVM limit to £45 any contactless transactions below this will be sent to the Issuer for authorisation, which should result in the need to touch the POS less by reducing the number of Chip & PIN transactions.
The Transaction Limit is the maximum value that is allowed for any contactless transaction at that Merchant. This has been badly handled in the past, creating different customer experiences at different merchants. Ideally the contactless Transaction Limit should be the same as the Chip and PIN transaction limit. This then allows a contactless transaction carried out using a mobile phone, with Apple Pay or Google Pay, to be treated in the same way as Chip & PIN transactions. In the coming weeks, most payments will be made at Supermarkets, and whilst the raising of the limit to £45 will enable a higher number of contactless transactions, a large family shop will exceed £45. To be able to Pay without PIN, people should enable their cards in Apple Pay or Google Pay, this will allow them to Pay by contactless no matter the transaction amount.
In the UK, the Transaction Limit has not been uniformly implemented, in some merchants it is set to the same as the CVM Limit, meaning contactless can only happen below £30. The result has been confusion over when Apple Pay and Google Pay transactions will work and when you need to perform Chip & PIN. POS providers and merchants need to take the opportunity of this limit change to test their systems to ensure that both the CVM Limit and the Transaction Limit are set appropriately to provide the maximum opportunity to pay by contactless.
As my fellow Principal Consultant Tim Richards points out in our video blog, other countries are using mobile apps to prevent the need for PIN – completely “Contact Free” transactions. We don’t have that capability in the UK yet, Apple Pay and Google Pay being the best options for now. We expect this to change as Open Banking progresses and payments without the need for PIN become more common.
Consult Hyperion have extensive experience in contactless and “Contact Free” payments and testing, we will be able to help organisations ensure they optimise their payments capability to meet the needs of their customers, get in touch for more information on how we can help.
In the meantime, to avoid PIN Pads, shop below £45 or ensure Apple Pay or Google Pay is working on your mobile device, and stay safe.
[1] https://www.finextra.com/newsarticle/35509/russian-banks-act-to-decontaminate-cash?utm_medium=newsflash&utm_source=2020-3-24&member=56902 [2] https://www.finextra.com/newsarticle/35493/dutch-banks-raise-contactless-limits-for-pin-entry [3] https://www.theguardian.com/money/2020/mar/24/limit-for-contactless-spending-to-rise-to-45-at-beginning-of-april
But let’s answer the question “So why do we need to wait a week?” Any supermarket with typically 500 stores and 15,000 terminals will want to test carefully before making changes. They may be in the middle of an unrelated project and those changes would need to be set aside, and the CVM limit tested carefully. In most cases the PSP or the merchant themselves will have terminals in a lab, perhaps some of the test analysts took a terminal with them when they started working from home, but even then can they get access to a test till? (those are too bulky to slip into a laptop bag and bring home). 1st April is just around the corner, and kudos to all those who are bringing the change into effect so quickly!