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Touchless payments – will the £100 limit change anything?

The contactless card payment limit will rise from £45 to £100 later this year as people are favouring contactless transactions to help curb the spread of the virus, as well as the convenience and speed.

The pandemic has undoubtedly accelerated the shift to a cashless economy. March 2021 figures from LINK, the UK’s main ATM cash machine network, found the number of cash withdrawals fell by 36% from 2019 to 2020, accounting for £37 billion less cash held by consumers. But as restrictions ease, will those behaviours stay, and how will banks need to respond?

For retailers and SMEs, the shift will continue to contactless payment, with only a small number of transactions being held back by cash due to customer choice.

People used to complain that bank payments and transfers were too slow. In response, Faster Payments was introduced; an initiative to reduce payment times between different banks' customer accounts – but there are concerns that the risk of contactless fraud is too high.

One bank that has raised such concerns is Starling. As a result, in February 2021 it reportedly said it would give customers the chance to opt-out of the £100 limit.

UK Finance’s report ‘Fraud: The Facts 2021’ notes that after the last time the contactless payment limit was increased, from £30 to £45 in April 2020, there was actually a decrease in contactless card fraud. However, this was heavily driven by the reduced number of opportunities criminals could capitalise on, due to the lockdowns. There are indeed security measures in place to help prevent this type of crime, namely the automatic request for a PIN every so often when tapping your card. But now that society is opening back up, the number of opportunities for fraudsters to act will unquestionably rise.

Banks will not want to make the same mistake again, so they will need to carefully monitor the risk of contactless payments going forward. AI and analytics can spot trends that a human might miss, such as if there is a higher risk of contactless fraud with one of the bank’s cards over another. They can then test stronger security measures, such as increasing the frequency that shoppers have to insert their PIN or improve customer education on protecting themselves from card fraud.

Banks also need to be proactive in helping customers settle fraud disputes. Being a victim of card fraud can be a stressful experience, so the way a bank supports customers can make the difference between frustration and disengagement, or full confidence in, and loyalty to, their financial provider. When customers are satisfied with how their bank reacts, they are more likely to stay, boosting the bank’s profitability.

Fortunately, technology can help. There is software that harnesses intelligent automation to make checking and resolving fraud disputes faster, cheaper, and easier.

Intelligent automation combines case management with automation to automate manual steps in the process of dealing with each customer query.

For example, voice recognition can automatically detect and capture key information on calls to customer service in real-time, saving the agent from having to make notes or asking the caller to repeat themselves. Software can also automatically investigate, surface for review and then send the customer correspondence to confirm when provisional credit has been sent and close the case.

In addition, all customer data, and logs of how the bank responded to each fraud claim with timestamps are recorded in one place. This means banks can clearly show the regulator that they are compliant with regulatory expectations and legal requirements.

Banks cannot keep relying on time-consuming manual work to get things done. They need to rethink the systems they have in place to be ready for the contactless payment limit to £100. When faster payments were initially introduced, a number of the banks had to add additional staff to cope with the need to introduce quicker checks. By automating manual processes, they can remove the need for so much manual intervention, simplify operations, improve productivity and boost customer loyalty.

We won’t know for certain just how much the rising contactless limit will impact fraud, but it’s better to prepare for the worst than expect the best. With the right tools, financial organisations can better manage fraud claims and be confident that they would be able to deal with a rise in cases to support customers every step of the way.

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Steve Morgan

Steve Morgan

Banking Industry Market Lead

Pegasystems

Member since

04 Sep 2019

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This post is from a series of posts in the group:

The future of Payments in Europe

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