- Absa just became the last of the big banks to adopt R500 as the maximum transaction limit for "tap" card payments that don't require a PIN.
- The pandemic has made people more eager to just tap - as they are reluctant to handle cash or type in their PINs on devices for hygienic reasons.
- In response, the maximum amounts for PIN-less transactions have been hiked in other countries. But the local amount of R500 is not under review, says the Payments Association of South Africa.
- For more stories go to www.BusinessInsider.co.za.
Last week, Absa became the last of the big banks to adopt R500 as the maximum transaction amount for contactless payments where a PIN is not required.
For any transaction below this amount, clients can simply “tap” their cards on card machines to pay.
Previously, Absa’s transaction limit was R200 – for anything more, the client had to enter a PIN.
But Absa says that Covid-19 brought an increased demand for contactless payments among its clients. Tapping is more hygienic, as it means avoiding skin contact with the point-of-sale devices.
“As a result of Covid-19, our customers demonstrated an increased demand for fully contactless payments not requiring a PIN, as these payments allow cardholders to not make contact with point-of-sale devices if their purchase is within the maximum contactless limit,” says Cowyk Fox, Managing Executive: Everyday Banking, Absa Retail and Business Bank.
All of the other banks already had a R500 limit, the maximum allowable amount in South Africa, as confirmed by the Payments Association of South Africa (PASA).
There were initial concerns about security risks with contactless payments in South Africa – with videos on social media appearing to show how money was stolen by simply tapping a device near enough to a victim’s bank card. But these were debunked by the South African Banking Risk Information Centre, which found that contactless payment cards are as secure as traditional cards.
“It is important to note that (Absa’s new) threshold aims to strike a balance between customer convenience and mitigating potential fraud risks,” Fox added.
The pandemic has brought a hesitancy to handle cash and communal card machines across the world, and a strong demand for “tap and go”. Last year, many countries increased their maximum transaction limits for contactless pay, with India most recently hiking its to 5,000 Indian Rupees (more than R1,000). In the UK, authorities are considering an increase to £100 (R2,000.)
But PASA told Business Insider that, in South Africa, the limits on contactless payments are not currently being considered for review.