UK – Financial Conduct Authority seeks views on removing the £100 contactless limit. One option put forward is to allow firms to set their own limits as happens in the United States.

The FCA is looking at whether removing or increasing the contactless limit could benefit consumers, merchants and economic growth in the UK. One option put forward is to allow firms, who use technology to reinforce strong fraud controls, to set their own limits as happens in the United States, according to the press release. Any changes would need to support good customer outcomes as required by the Consumer Duty.

Families and businesses across the country could benefit from greater choice, flexibility and smoother purchases, under proposals being considered by the FCA. Making regulation less prescriptive would also give firms greater control and could promote innovative payment methods or fraud prevention solutions.

This forms part of the work, announced in January in a letter to the Prime Minister to support growth.

David Geale – executive director of payments and digital assets at the FCA, said: ‘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.

‘We’ve worked fast to progress this work which is one of around 50 measures we put forward at the start of the year to help support economic growth across the UK and, in turn, improve lives.‘

Economic Secretary to the Treasury, Emma Reynolds, said: ‘Every regulator has a part to play in the collective mission to drive growth through our Plan for Change, which puts more money into working people’s pockets.

‘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.’

The FCA will focus on how consumers are protected in the case of any changes to contactless limits. Existing legislation requiring firms to reimburse consumers in cases of unauthorised payment fraud, for example when their cards are lost or stolen, will remain in place.

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1. Read our Engagement Paper (PDF).
2. We set out how the FCA is working to accelerate digital innovation in our response to the Prime Minister’s letter. In this letter regulators were asked to reduce regulatory burden and support economic growth. Read our response.
3. The 2023 independent Future of Payments ReviewLink is external noted ‘there is the opportunity to further optimise the UK consumer experience [for in-person spending] – for example by optimising contactless limits or eliminating the occasional PIN prompt.’
4. The Review also noted the opportunity to move to a more outcomes-based regime where we have greater flexibility to enforce the intent of the regulations, enabling a more convenient consumer experience, while not increasing risk.
5. The Government’s National Payments VisionLink is external reinforced the Future of Payments Review’s conclusions about the lack of flexibility of contactless limits and set out the Government’s commitment to revoke the payments authentication regulations relating to Strong Customer Authentication (SCA) in the Payment Services Regulations (PSRs).
6. Contactless payment fraud, where a contactless card is lost or stolen and then used by someone other than the cardholder to pay for goods and services at a contactless terminal, remains a very small part of overall payments fraud, and a relatively small part of unauthorised payment fraud.
7. According to published UK Finance analysis, fraudulent contactless spend totalled £41.5m in 2023; an increase of 19 per cent on 2022; they state however that recent rises in contactless fraud have been increasing at a much slower pace than the expansion in transactions volumes and values, and the fraud to turnover ratio for contactless fraud remains below that for unauthorised card fraud overall.