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Summary
- British Finance Minister Rishi Sunak announced an increase on the contactless payment limit from £45 to £100 in a bid to boost the retail sector.
- Sunak said the UK is no longer required to adhere to the earlier £45 limit for contactless transactions after breaking up from the EU.
- Several London-listed retail stocks such as Next PLC, JD Sports Fashion, Marks & Spencer Group, and WH Smith PLC closed in green on 3 March, following the news.
British Finance Minister Rishi Sunak announced an increase on the contactless payment limit from £45 to £100, in his budget speech on 3 March to help boost the retail sector. Several LSE-listed retail companies such as Next PLC, JD Sports Fashion, Marks and Spencer Group and others’ shares closed higher following the news.
The move comes after the Financial Conduct Authority (FCA) recommended lifting the legal limit after a public consultation. The banking sector is expected to incorporate the new contactless limit change later this year.
The UK had increased the tap-and-go limit to £45 in April 2020 to reduce coronavirus transmission amid lockdown restrictions and social distancing rules limiting the use of cash. The share of contactless debit card payments rose from 40 per cent in 2019 to 60 per cent in September 2020 in the UK, since the pandemic started.
Want to know more? Do read: Most Britons Forced to Make Contactless Payments During Coronavirus Crisis
Sunak said the UK is no longer required to adhere to the £45 limit for contactless transactions after exiting from the EU. The latest increase is like the upper limit set by several other countries recently for contactless transactions. Australia increased their upper limit to AU $200, while Canada capped it at CN $250 and the US at US$200.
However, the increasing adoption of cashless payments can impact older and vulnerable sections of the population, who primarily transact using cash. According to data from YouGov, only 26 per cent of British people were comfortable transitioning to cashless forms of payment.
Moreover, while higher adoption of cashless payments could see lead to security related challenges. Nick Fryer, CTO of fintech firm Dojo and Paymentsense, recommended people to frequently check their bank statements, use protective cardholders and keep money across different accounts to help protect themselves against fraud.
Copyright © 2021 Kalkine Media Pty Ltd.
Retail stocks close in green
Several London-listed retail stocks reacted positively to the news. FTSE 100 constituent retail company Next PLC (LON: NXT) shares closed at GBX 7,516.65, up by 0.52 per cent on 3 March, following the news. Another FTSE 100 retail company JD Sports Fashion PLC (LON:JD), stock prices closed at GBX 835.80, up by 2.80 per cent.
Similarly, FTSE 250-listed retailers, clothing giant Marks and Spencer Group (LON:MKS) closed at GBX 148.45, up by 2.20 per cent and retail major WH Smith PLC (LON:SMWH) shares closed at GBX 1,925.00, up by 4.73 per cent, for the same period.
Comparatively, the broader indices, FTSE 100 Index, closed at 6,675.47, up by 0.93 per cent, while FTSE 250 closed at 21,436.32, up by 1.22 per cent on 3 March.
