The impact of the contactless limit increase on financial inclusion
The financial services industry has transformed since the onset of the pandemic. We’ve seen the number of digital payments dramatically increase in the UK and the volume of cashless transactions globally is predicted to double by 2030.
The volume of cashless transactions globally is predicted to double by 2030
In October 2021, we hit a new milestone for the payments industry. Shoppers across the UK are now able to spend up to £100 using contactless card payments, more than double the previous limit of £45.
For many small businesses who adopted card payment technology for the first time during the pandemic, this is a welcome move – it means the infrastructure they have in place will continue to serve them and their customers well.
But what does this increase mean for the future of the payments industry and financial services more widely?
Changing consumer payment preferences
While many businesses have transformed their operations to continue serving their customers throughout lockdowns, the past few months have also seen a significant shift in consumer payment preferences.
As people came to terms with the realities imposed by the pandemic, more turned to digital transactions, contactless payments, and online shopping for its convenience and safety.
The steep jump from £45 to £100, compared to the modest £30 to £45 in April 2020, is indicative of the importance cashless payments have on businesses and industries.
As consumers become more comfortable with cashless transactions, the prevalence of contactless commerce will continue.
The impact on SMBs
The speed at which businesses of all sizes have adapted to the necessities of a world in pandemic is truly fascinating. From micro businesses and sole traders to enterprises with hundreds of employees, these companies have shown resilience and agility.
While this change was entirely new for many, and involved an investment in the infrastructure needed to support online and card payments, the rise in the limit makes this investment all the more worthwhile.
For many business owners of all sizes, the change to contactless limits is a great opportunity to increase the speed and efficiency of the store itself. This in turn helps customers to shop faster and safer, which is vital in the current climate for the customer experience.
Is the future of payments plain sailing?
Clearly there are many benefits of cashless transactions, but it is important to remember that a financial system must work for all, not the majority.
There are still many people who rely on cash in their everyday lives and it’s great to see the ongoing and important work that the government is doing to ensure the UK’s cash system remains sustainable for the long term.
It is vital that both the government and businesses view payment options and preferences through a lens of financial inclusion. It will be interesting to see further developments across the industry as we look ahead in 2022, demonstrating how cash and cashless transactions can co-exist, creating a more financially inclusive society.
