Woolworths, Coles to raise tap-and-go limit to $200

Australia’s two biggest supermarkets Woolworths and Coles will raise their dollar limits for contactless transactions without PIN numbers from $100 to $200 in a bid to stop further COVID-19 infections by lessening the use of payment terminal keypads.

The move comes, iTnews has confirmed, after the two grocery giants agitated strongly for the lift to the government, prevailing on global credit card schemes Mastercard and Visa as well as regulators and National Cabinet to raise the current $100 limit until the spread of the virus subsides.

The official announcement of the lifting of the contactless limit is scheduled for Friday morning, however it is already working in some supermarkets.

Woolworths chief executive Brad Banducci has been publicly outspoken about the need for the contactless limit to rise.

Customers using Apple Pay to tap via glass will also be roped in under the raised limit.

Importantly, eftpos transactions linked to Apple Pay - which is offered by ANZ, Suncorp and raft of smaller banks - will also be PIN free to $200.

Less clear is how other merchants will be treated.

Coles and Woolworths are classed as ‘strategic merchants’ under payment card interchange fees because of the volume of transactions they push. This means the supermarkets get lower card interchange fees, money that is shunted between issuing banks.

One issue is that while Australia’s biggest retailers might be doing the right thing in terms of hygiene, if smaller merchants are not roped in, it will effectively steer customers to the supermarkets with the most market power.

A further issue is that the push to get people to use contactless transactions overall will deliver a handsome revenue windfall to credit card giants Mastercard and Visa because the bulk of debit-based tap-and-go transactions ride on their so-called proprietary rails.

The Reserve Bank of Australia has been pushing for banks to further roll out a regulatory reform known as least cost routing, also know as merchant choice routing, that lets shopkeepers set the rails transactions ride on rather than the banks and the card schemes.

Shopkeepers are already on the warpath over tap fee gouging having formed a fightback group earlier this year. 

With the RBA's review of payments systems regulation and now on hold until next year, and consumers being urged to tap more than ever, an obvious and real question arises as to whether there is now a case for more immediate regulatory measures.  

Coles and Woolworths are being contacted for comment.