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10 Oct 2019

The fault in our cards: how freezing your debit card won't block all payments

Find out the loophole that applies to some contactless payments

You might think freezing your debit or credit card will prevent it being used if it's lost or stolen, but a loophole means some contactless transactions might still go through.

More banks are offering cardholders the option to 'freeze' their card, as an alternative to cancelling it altogether. However, while this will block most payments, it won't block all.

Here, we explain why some contactless payments could still be made on your card even after its frozen and whether or not contactless cards are safe to use.

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Will freezing a card stop contactless payments?

If your contactless credit or debit card is lost or stolen, you have two options.

The first is to cancel your card, which will make it invalid. You'll be sent a new card with a different number.

An alternative, which has recently become more available, is to freeze your card, which will put a temporary block on payments - particularly helpful if you're not sure whether your card is lost, stolen or simply misplaced.

In theory, both options should immediately stop any payments from being authorised on your cards. In reality, however, some transactions - known as an 'offline' transaction - could still be made.

What is an offline payment?

There are two ways transactions can be made: online and offline.

During an online card transaction, the machine that takes your payment immediately checks with your bank to make sure that you have enough money in your account. If your card has been cancelled or frozen, this will be flagged and the payment won't be authorised.

Offline payments occur when your bank account isn't automatically checked at the point of making a transaction. This means that the payment machine won't be told that your card isn't authorised and will allow the payment to go ahead.

Contactless cards are particularly at risk of being used despite a freeze being in place, because you don't always need to enter your Pin number to make a payment.

The issue lies with the payment providers, namely Amex, Mastercard and Visa. Each payment provider sets a payment threshold (called a floor limit) at which point cards are forced to go online for authorisation - but below this limit, offline transactions could continue to slip through.

How many companies still use offline payments?

A small number of companies regularly use offline payments. Generally, this is so they can offer you a service before calculating the amount of money you should be charged.

Fares on Transport for London (TfL) services, for example, are always processed offline, because the price you pay will depend on the number of journeys you make. While you tap your card each time you travel, your fare won't be calculated until the end of the day.

Although card issuers have been working to ensure that the vast majority of transactions take place online, there will continue to be exceptions.

A spokesperson from Mastercard told us:'All contactless payments on our network need to go online for authorisation, with certain exceptions. Those exceptions are mainly for TfL and other transport services with variable pricing depending on your journey, and these transactions represent the overwhelming majority of the approx. Some 1% of contactless transactions in the UK remain offline.'

These sentiments were echoed by Visa, which said: 'The reality is that a high number of transactions are online now. There are a small percentage of transactions that are processed offline, but these tend to be companies in the travel space that require more time to calculate your payment.'

Amex didn't provide a comment, but also highlighted that 'transactions for transport and parking' could be made offline when they spoke with Money Saving Expert last year.

What should I do about unauthorised transactions?

Even after you freeze your card, you should continue to check your account for transactions, especially if you live in London or a city that allows contactless payments on public transport.

In cases where you're sure your card is lost or stolen, you may be better off cancelling it altogether, rather than relying on a freeze.

If you find any payments were made after the card was frozen, get in touch with your bank and they should refund you.

You can find out more in our guide to complaining about unauthorised transactions.

Are contactless payments safe?

Despite the loophole, contactless cards are generally a safe way to make a payment.

Contactless card crime remains low, UK Finance figures show, with only 2.7p in every £100 spent being affected by fraud.

The transaction limit of £30 also acts as a safeguard and card issuers can now restrict the number of contactless transactions you can make before you have to enter your Pin number.

Since 14 September 2019, new rules under the EU's second Payment Services Directive (PSD2) have required banks to ask for a Pin if your cumulative contactless payments exceed u20ac150 (roughly £130), or after five consecutive contactless payments have been made.

The rules also require that a Pin be requested where the contactless transaction exceeds u20ac50 (around £43), although there are currently no plans to change the existing £30 contactless limit in the UK.

For more information, check out our guide on new ways to pay, which gives advice on using contactless cards, Apple Pay and Google Pay.