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City regulator paving the way for buyers to make big bucks contactless paymentMoving beyond the current £100 transaction limit for physical cards.
Under new schemes from financial conduct authority (FCA), scheduled for next year, banks and payment providers with strong fraud controls will have the autonomy to set their own payment limits.
These regulatory changes are scheduled to begin on March 19, although individual companies will decide when to adopt the flexibility.
The regulator said companies that go ahead with the changes will have to clearly communicate the same 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 from Barclays, 94.6 percent of eligible in-store card transactions were contactless in 2024.
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 about 50 measures outlined by the regulator in a letter to Prime Minister Sir Keir Starmer in January to 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 at UK Finance, said: “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.”