The Financial Conduct Authority (FCA) is considering whether removing or increasing the current £100 contactless card payment limit could benefit consumers, businesses, and the wider economy. The UK’s financial watchdog has launched an engagement paper seeking views from industry experts and the public, as part of a broader initiative to enhance trust and flexibility in the UK’s payment system.
One option being explored is allowing financial firms to set their own limits, particularly if they have robust fraud prevention measures in place. This approach is already used in the United States, where banks and payment providers determine their own thresholds based on risk assessments and consumer preferences.
A step towards greater payment flexibility
The FCA’s initiative forms part of a wider strategy to support economic growth, as outlined in a letter to Prime Minister Sir Keir Starmer earlier this year. Any changes would need to align with Consumer Duty rules, ensuring that customers receive fair treatment and good outcomes when using payment services.
David Geale, Executive Director of Payments and Digital Assets at the FCA, emphasised the significance of contactless payments in the UK:
“Currently, 85% of people in the UK make contactless card payments each month. This is the perfect opportunity to explore whether we can improve and increase trust in the UK’s payments system.”
The contactless limit was last increased in October 2021, rising from £45 to £100 per transaction. Since then, digital and contactless payments have continued to dominate UK spending habits, making it essential to evaluate whether the current limit still meets consumer needs.
Concerns over fraud and consumer protection
One of the key considerations in this review is the balance between convenience and security. While higher contactless limits could make payments faster and more seamless, there are concerns that it could increase the risk of fraud, particularly if a lost or stolen card falls into the wrong hands.
However, the FCA reassured consumers that existing protections against unauthorised payments would remain in place. Under current legislation, banks and payment providers are required to fully reimburse customers for fraudulent transactions made without their authorisation.
Emma Reynolds, Economic Secretary to the Treasury, welcomed the FCA’s review, stating:
“The FCA’s review of the contactless payment limits, including removing the £100 limit on individual payments, is a welcome step to ensure that families can safely benefit from more flexibility when making purchases.”
Industry support and calls for a flexible approach
The financial industry has broadly welcomed the FCA’s move, with some experts suggesting that the power to set limits should rest with banks and payment providers rather than regulators.
Jana Mackintosh, Managing Director of Payments and Innovation at UK Finance, stressed the importance of fraud prevention while advocating for a more flexible approach:
“Having a contactless limit is important in terms of fraud prevention, but we believe overall limits and the number of times a customer needs to enter a PIN should be determined by industry rather than the regulator. Banks know their customers and can strike the right balance between protecting them and giving them fast and secure payment options.”
This perspective aligns with the FCA’s consideration of a tiered or risk-based system, where individual financial institutions could adjust limits according to customer spending patterns and security measures.
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Public consultation and next steps
The engagement paper is open for feedback until May 9, after which the FCA will analyse responses and consider its next steps. Potential outcomes could include:
- Retaining the current £100 limit, with no changes
- Increasing the limit to a higher threshold, such as £150 or £200
- Removing the limit entirely, allowing firms to set their own maximum amounts
- Introducing personalised limits, where customers can set their own preferences via their banking app
The review comes at a time when digital payments continue to evolve, with many consumers shifting away from cash in favour of contactless cards, mobile wallets, and wearable payment devices.
Balancing convenience and security
The FCA’s decision will have far-reaching implications for both consumers and businesses. While increased contactless limits could provide greater convenience, the industry must ensure that any changes do not compromise security or expose customers to higher risks of fraud.
With the public consultation now underway, all eyes will be on the FCA’s final decision—and whether Britain’s contactless payment landscape is set for a major shift in the near future.
