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On the money

Contactless change could help crooks

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💳 ⚠️ Dangling your debit or credit card over a payment reader in a shop or restaurant is about to become more dangerous. Financial advisers warned the Mail this week that changes to the contactless limit, which is set to rise from £45 to £100 on 15 October, will increase the risk of fraud and debt. Cardholders will be able to make five transactions or spend a maximum of £300 (up from the current £130) before they are asked for their Pin.

One expert suggested bag-snatching and pickpocketing will become more common. “Contactless payments allow people to disconnect from their purchases, and someone could easily spend £300 without realising it,” said Martyn James of the complaints website Resolver. “Now that we can socialise again, our guard is down… I would personally prefer to enter a four-digit number than risk losing hundreds of pounds if someone stole my wallet.”

Encouraged by a government seeking to limit the spread of Covid-19, contactless transactions surged during the pandemic. They now account for 49% of credit-card purchases and 65% of debit-card transactions. Some banks allow you to set payment limits or ditch contactless altogether: Barclays lets you set limits or turn off certain types of payments via its app, while NatWest customers can switch off the contactless function.

Americans put the squeeze on Rolls

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🇺🇸 ✈️ Is nothing sacred? Cash-rich US private equity groups on the hunt for post-Brexit bargains have been snapping at the heels of British companies such as Morrisons supermarkets, infrastructure specialist John Laing and Meggitt, which makes parts for military planes and weapons systems.

Now Causeway Capital Management, a Californian investment group, has cheekily told the FT that Rolls-Royce, the aircraft engine manufacturer in which it is the biggest shareholder, needs a board “refresh”. Portfolio manager Jonathan Eng said he would like Anita Frew, who takes over as chairwoman of the FTSE 100 group in October, to consider whether it has the right expertise at the top. The existing board was “fine for what it was”, Eng said, but now is the right time to review its make-up.

Other investors may think the upfront American has a point, says Alistair Osborne in The Times. When Rolls-Royce’s chief executive, Warren East, arrived in 2015, shares were at 780p; now, with turnaround strategies blown off course by the pandemic, they languish at about 115p (admittedly well above the 39p reached last October).

Eng didn’t name names, but Osborne does, pointing out that board member Angela Strank has a fossil-fuel past at BP – at a time when Rolls is starting the transition to zero carbon – and commenting that “the board looks top-heavy in accounting clout”, with a banker and an existing and former finance chief among the non-execs. Frew, meanwhile, “is mainly a career non-exec”. Ouch!

A bumper payday for Paidy?

🛍 💴 A former Goldman Sachs trader who once tried and failed to get a credit card in Tokyo has had the last laugh by forming a business that provides an alternative to Japanese consumers. Paidy is valued at more than $1bn, one of only six start-ups of that size in the country, and a stock float is under consideration.

Russell Cummer, the founder and executive chairman, told Bloomberg he launched the “buy now, pay later” business in 2014. Its business model – paying retailers upfront and receiving money from the customer later – is popular with younger customers wary of the interest charged on credit cards. Transaction fees from merchants make up the bulk of revenues.

Cummer experienced “dark times” after leaving Goldman Sachs: he had to borrow money from his father twice to meet payroll payments on a previous peer-to-peer lending venture.

Paidy, which recently raised $120m and counts Soros Capital Management and Visa among its backers, uses machine learning to evaluate the risk of transactions in milliseconds and takes on the credit risk itself. “We’re not in the business of extending credit to people that are unable to pay us back,” Cummer said in response to criticism that such businesses encourage people to spend more than they can afford.