Increase in contactless payments limit may not be ready until April
Banks have agreed to raise threshold from €30 to €50 in effort to reduce handling of cash
By the time the contactless payment increase takes effect, the Republic may already have 15,000 coronavirus cases. Photograph: iStock
Minister for Finance Paschal Donohoe’s request that banks increase the amount that can be spent in contactless payment transactions in stores to €50 from €30 to minimise the handling of cash amid Covid-19 is not expected to be fully rolled out until April 1st.
While banks agreed at a meeting with the Minister on Wednesday to increase individual transaction amounts, sources said this still needed to be worked through with a number of parties, including providers of point-of-contact devices used in shops, banks, individual card schemes, as well as the retail sector.
The planned increase is expected to take effect in stages up until the start of next month.
“Planning is under way, and we expect it will be rolled out in the coming weeks,” said a spokeswoman for Banking & Payments Federation Ireland (BPFI), declining to comment further.
By the time the contactless payment increase takes effect the Republic may already have 15,000 coronavirus cases, according to projections outlined by Taoiseach Leo Varadkar this week.
The chief executives of the country’s five retail banks also agreed in the meeting with the Minister to offer up to three-month payment breaks on home and business loans for borrowers affected by coronavirus.
The BPFI said that banks “want to ensure” that any virus-related application for a payment break and further reviews will not adversely affect a customer’s credit record and the bank’s reporting of these facilities.
The Central Bank of Ireland said on Thursday, after a meeting with the five banks, that it is working with lenders “to develop practical measures” to ensure that borrowers’ credit scores would not be affected by the agreed forbearance measures.
European regulators are coming under mounting pressure to ease a new accounting rule introduced in recent years – known as IFRS 9 – that requires banks to set aside bad-debt provisions once they expect loans to run into problems. Previously banks were generally only allowed to make such provisions once a loan had soured.
Bad-debt provisions eat into banks’ earnings and may ultimately lead to companies having to dip into their capital reserves if they post losses. This in turn may affect banks’ ability to lend.