UK chancellor Rishi Sunak announced on Wednesday that the legal limit on contactless payments will more than double to £100 ($139.70).
The increase in the limit is intended to boost the struggling retail sector and make it easier for Brits to part with their cash for goods in-person. The limit increase comes after the Financial Conduct Authority (FCA) held a public consultation on contactless payment limits and recommended the change.
Britain, much like the rest of the world, has battled the COVID-19 pandemic and placed all or most of its populations either in lockdown or have heavily restricted movement. This has also led to social restrictions and the ability to use cash.
In the UK, the proportion of debit card payments using contactless has risen since the onset of coronavirus, from four out 10 in 2019 to six out of 10 in September 2020.
“As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the UK," said Sunak in a statement.
Watch: Rishi Sunak begins Budget address in House of Commons
Sunak also used his statement to point out that since Britain has left the European Union (EU), the UK is "no longer bound" by the previous cap of £45 for contactless payments. The government statement highlighted how this brings the UK in line with legal limits on contactless payments across multiple other countries, such as Australia, Canada and the US, who have recently increased their limits to AUS$200 (£112), CN$250 (£143) and US$200 (£145), respectively.
He says that "millions of businesses and consumers across the UK are to benefit from an increase" and says Wednesday's budget announcement will provide more details on how the government is better supporting the UK retail sector.
Will COVID-19 push UK into a cashless society?
The pandemic has been rolling for one year and one of the biggest changes when it comes to personal finance has been the focus on online shopping and cashless payments.
While this may seem more efficient for now and in the longer-term, analysts have warned of some issues that may arise in a cashless society.
Nick Fryer, chief technology officer of Dojo, part of the Paymentsense, warned that while the "logic is clear" to increase limits so therefore making it "more likely" for consumers to spend more when they go into a shop and helping boost the retail sector — "the only issue is protection."
"With Sunak raising the contact limit to the, not insignificant sum of £100, what steps is he going to put in place to make sure that our cards are protected from fraud?," says Fryer.
He suggests that consumers need to do three things to protect themselves:
Check your bank statement regularly.
Use a protective cardholder.
Spread your money across different accounts.
Meanwhile, the use of contactless payments greatly reduces the risk of the virus spreading from minimising your hands touching items that other people have touched.
WATCH: Visa CFO on why 'cash is dirty'
However, while contactless payments may be no big deal for many people, it's actually the most vulnerable people in society that still use cash.
READ MORE: Only 26% of Brits want a cashless society
Before the coronavirus pandemic, there were repeated calls to protect the use of cash — motivated by social inclusion concerns and even nostalgia.
In 2018, an independent group reviewing consumer spending called Access to Cash warned that Britain risks “sleepwalking” into becoming a cashless society and that, in turn, creates huge problems for the millions of people who live in rural areas or are in a lot of debt.
Latest data from YouGov, analysed by MoneyTransfers.com, showed that only 26% of Brits would welcome transitioning to just electronic payments.