In case you hadn’t heard, the UK’s contactless limit has been increased from £20 to £30. This makes it more appealing for some retailers and of course for NFC payment fans, it is another milestone towards total payment nirvana. Kevin Jenkins, managing director for UK & Ireland at Visa Europe, shares his opinion

Earlier this year, at a shop somewhere in Europe, a customer took out their Visa card, touched it to the terminal and paid for something.

They didn’t know it at the time, but that contactless transaction was the one billionth during our current calendar year – crossing a major milestone in the region.

Today comes another milestone. The spending threshold for contactless transactions has increased from £20 ($30.4) to £30 in the UK; the latest step-increase as the technology becomes more and more a part of everyday life.

Progression since launch
When it was first introduced in 2007 with a threshold of £10, contactless was aimed at high volume, low value transactions.

Sandwich shops, coffee houses and fast food outlets were early adopters of the technology as it allowed them to process high numbers of low-cost payments in less time.

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By GlobalData

Then, when the threshold was raised to £20 in 2012, bars, pubs and convenience stores began to ask to ask if you wanted to "touch and pay". Hardly surprising, given the typical bottle of wine, round in the pub or snack run fits neatly into that £20 bracket.

Here at Visa Europe, we believe that the new threshold increase to £30 could be the most significant to date, and has the potential to essentially redefine contactless usage.

With contactless now accounting for one in 11 in-store Visa transactions, and Britons increasingly embracing the technology, our data shows that the rise could impact as many as 3 million Visa transactions per day in the UK, for a total of over £70m.

Retail potential
Customer experience-focused retailers such as clothing and department stores, whose stock may have been priced above previous threshold limits, could now benefit from activating their contactless terminals.

Our analysis shows that 16% of Visa transactions at such retailers fall into the £20 – £30 category, so there is an opportunity to increase convenience, improve service and deliver an enhanced shopping experience for a significant number of their customers.

Other retailers primarily concerned with speed and efficiency can also expect to see tremendous benefits from the contactless threshold increase.

For instance, the average supermarket basket of £25 can now be paid for with contactless, giving customers greater speed when it comes to checkout.

Britons’ food shopping habits have changed dramatically in recent years, as consumers replace their high value weekly Saturday shop with more frequent, smaller trips.

With people leading busier lives, and increasingly integrating their grocery shopping into their commute home, it is more imperative than ever before for supermarkets to expedite their payment process.

Our data suggests that by accepting payments of up to £30, Visa cardholders will be able to make an additional 1.1 million contactless transactions every day in UK supermarkets.

And, with contactless payments taking a fraction of time to complete compared to cash or chip and PIN, the time-saving benefits could be in the region of 2,139 hours or 89 days across the board. The result? Speedier payment, fewer queues and happier customers.

We applaud the decision to increase the contactless threshold to £30 as we think it will deliver maximum benefit to the greatest number of debit and credit cardholders.

Visa Europe data shows that 75% of Visa card transactions are currently £30 and under, so contactless will become much more useful for the vast majority of everyday payments.

The UK has also seen unprecedented growth in contactless adoption in the past year; our data shows that the number of w, and the amount spent grew by 243% in the same period. What’s more, we are now also seeing touch to pay behaviour translating to other technologies; the recent launches of Apple Pay for iPhone 6 and Apple Watch and the new bPay wearable products have given consumers new ways to make contactless payments.

All the while, security levels remain as high as they always have been, and fraud rates are at their lowest to date.

Contactless cards contain a highly secure chip that maintains the card’s security, enabling it to interact with contactless point of sale terminals safely.

This makes it just as a secure as any chip and PIN transaction. In-built security functionality also means that the cardholders will be asked for their PIN after a certain number of transactions, so in the unlikely event that their contactless card is lost or stolen, it could only be used a few times before the PIN is required.

If a customer is defrauded on their contactless card, they can get their money back subject to their bank’s terms and conditions.
They will receive the same level of protection from their bank as they would with any other transaction.

Eight years on from its launch, contactless really is becoming the "new normal" in the UK as millions of consumers embrace the convenience, speed and security of touch to pay at checkout.

Today’s threshold increase now makes it possible for an even wider range of retailers to meet customer demand for frictionless payment, and ultimately, provide a better shopping experience that paves the way for future technologies.