The current £100 limit for contactless card payments may be eliminated as part of a significant change for consumers. The Financial Conduct Authority (FCA) is contemplating raising or completely removing the existing limit. This initiative was initially communicated in a letter to the Prime Minister by the FCA earlier this year.
In a recent update, the FCA released an engagement paper outlining potential actions and is seeking input on possible adjustments. Among the proposed options are increasing the limit or doing away with it entirely, as well as permitting companies to set their own limits, akin to the practice in the United States.
The contactless payment limit has undergone multiple revisions over the years. Starting at £10 in 2007, it increased to £15 in 2010, then to £20 in 2012, followed by £30 in 2015, £45 in 2020, and finally reaching £100 in 2021. Typically, individuals can make numerous contactless payments in a day, each not exceeding £100. However, if the cumulative transactions surpass £300, the user may be prompted to enter their PIN.
David Geale, the FCA’s executive director of payments and digital assets, emphasized the importance of exploring ways to enhance trust in the UK’s payment system, especially considering that 85% of UK residents make monthly contactless payments. The review of contactless payment limits by the FCA aligns with their commitment to supporting economic growth and enhancing livelihoods.
Economic Secretary to the Treasury, Emma Reynolds, lauded the FCA’s decision to review contactless payment limits, including the possibility of removing the £100 cap on individual transactions. This move aims to provide families with increased flexibility in their purchase transactions while ensuring safety.
According to UK Finance analysis, fraudulent contactless spending in 2023 amounted to £41.5 million, marking a 19% rise compared to 2022. Despite the increase in fraudulent activities, the data indicates that the growth rate of contactless fraud is slower relative to transaction volumes and values.
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