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Under this, buyers can find it easier to pay large amounts using contactless. City Regulator’s plan.
Current rules mean people can pay up to £100 per transaction when using a physical contactless card.
Banks and payments providers with strong fraud controls will be able to set their own limits, under changes being introduced by the Financial Conduct Authority (FCA) next year.
The rule changes will come into effect from March 19 and it will be up to companies to exercise the flexibility to change their limits as and when.
The regulator said those doing so will have to clearly communicate the changes to their customers.
Its purpose is to allow companies to better respond to changing consumer demands, inflation and new technology.
Firms are also being encouraged to let customers set their own limits, or turn off contactless altogether, as many high street banks are already doing.
The popularity of contactless payments has grown over the past few years, with contactless card transaction limits having been raised in several phases in the past.
According to consumer spending data barclays94.6% of eligible in-store card transactions in 2024 were contactless.
Last year, there were 10 times more contactless transactions per month than in 2015, according to Barclays.
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As well as the £100 limit for a single contactless card transaction, the cumulative total in contactless transactions is £300 or no more than five consecutive contactless transactions since the last application of “Strong Customer Authentication” to verify payments.
Under the rule change, companies will also have the flexibility to consider changing the cumulative contactless approach if they wish.
The FCA believes the greater flexibility option will encourage companies to increase fraud prevention, thereby providing greater protection to consumers.
Existing protections will remain in place, meaning consumers should be reimbursed in cases of unauthorized fraud, such as if their card is lost or stolen.
The review of contactless card limits was one of the nearly 50 measures the regulator outlined in a letter to Prime Minister Sir. keir starmer in January to help support economic growth.
The proposals were up for consultation till October 15. The regulator has previously said that, based on industry feedback, it anticipates that most companies will continue to enforce the £100 limit for now.
David Gilley, executive director of payments and digital finance at the FCA, said: “Contactless is people’s preferred way to make payments. We want to make sure our rules provide flexibility for the future and choice for both firms and consumers.”
Kate Nicholls, chair of UKHospitality, said: “Making life easier for consumers is a positive thing for any hospitality and high street business, and I am delighted that the FCA is driving forward this change.
“Contactless has become the preferred payment method for many and increasing the limit could mean a quicker and easier experience for consumers. While many still prefer to use cash or chip and PIN, this change adds much-needed flexibility for providers and consumers.”
Jana McIntosh, Managing Director of Payments and Innovation uk financeSaid: “We welcome the FCA’s move to give banks and payment providers greater flexibility over contactless limits in the future.
“Contactless is a very popular and secure way to make payments.
“While we do not expect to see any immediate changes to the £100 contactless limit, any future changes made will be done with caution and ensure strong security and fraud controls remain in place.”