MTTM Podcast Episode 542 – Where next for stock markets & Pay by Bank warning

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New contactless rules and the risks of "Pay by Bank"

Summary:

We look at the changing landscape of consumer payments, starting with the FCA’s removal of the £100 legal limit on contactless card transactions. While the legal restriction is gone, we explain why banks are hesitant to change their current limits. We also discuss the "Pay by Bank" option appearing on major retail sites like Amazon and eBay, revealing why this method - while convenient for merchants - poses a significant risk to consumers who may unknowingly forfeit their Section 75 credit card protection.

Key Insights:

• The legal cap is gone - The FCA has removed the £100 restriction on contactless card payments to provide more flexibility for the 85% of UK adults who use the technology monthly.
• Banks are staying cautious - Major providers including Barclays, NatWest, and Santander are keeping the £100 limit in place for now to maintain security standards.
• Biometrics offer higher limits - Mobile wallets like Apple Pay and Google Pay are not subject to these caps because they use biometric security (Face ID or fingerprints), making them a more flexible choice for larger spends.
• Pay by Bank lacks protection - Paying directly from your bank account via Open Banking (Pay by Bank) means you lose Section 75 protection and "chargeback" rights, which are standard with credit and debit cards.
• Merchant benefits - Retailers prefer "Pay by Bank" because it eliminates transaction fees and provides instant settlement, but consumers can lose out on rewards like cashback or air miles.

Technical Analysis: Where are the Markets Heading?

Summary:

With investment markets experiencing volatility due to global tensions, I use technical analysis to identify potential future directions for the UK and US stock markets. Technical analysis is not a crystal ball but a way to map out probabilities based on investor sentiment and historical patterns. I highlight specific "support" and "resistance" levels for the FTSE 100 and S&P 500 to help investors understand whether we are facing a minor pullback or a more significant market correction.

Key Insights:

• Probabilities over certainties - Technical analysis can be likened to a weather forecast; it uses data to identify the most likely outcomes (rather than offering a guaranteed prediction).
• Market memory - Support levels (where the market bounces back) and resistance levels (where it struggles to break higher) exist because of human psychology and automated algorithmic trading.
• S&P 500 at a crossroads - The US market is currently testing its 200-day moving average. A failure to stay above the 6,600 level could signal a wider 10% correction toward 6,300.
• FTSE 100 resilience - The UK market remains in a long-term upward trend, but the 10,000 mark is a crucial psychological level. Falling below 9,900 would indicate a formal correction.
• Removing emotion - Using technical levels as a "sense check" can help long-term investors avoid panic-selling during volatility by providing context for market movements.

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