The Financial Conduct Authority (FCA) is reviewing the £100 contactless payment limit, considering whether removing or increasing it could enhance consumer convenience, business efficiency, and economic growth. With contactless transactions now a dominant payment method in the UK, this potential change could reshape how people pay for goods and services.
According to DevonLive, the FCA’s initiative is part of a broader regulatory effort launched in early 2025, aiming to support innovation in financial services. The review will assess whether adjusting the cap can provide more flexibility while maintaining security and fraud prevention standards.
Regulator Explores Changes to Contactless Payment Cap
The Financial Conduct Authority (FCA) is reviewing the £100 contactless payment limit, considering whether removing or increasing it could enhance convenience, support economic growth, and maintain security. This review is part of a broader initiative announced in early 2025, comprising 50 measures aimed at stimulating economic growth.
David Geale, executive director of payments and digital assets at the FCA, highlighted the widespread use of contactless payments in the UK, stating:
“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.”
Potential Benefits for Consumers and Businesses
The FCA’s review seeks to determine whether revising the limit could offer more flexibility to both consumers and merchants. Higher limits may streamline transactions and reduce the need for PIN authentication on higher-value purchases.
One proposal under consideration is allowing businesses that use advanced fraud prevention technology to set their own limits, similar to the United States model. This could create a more adaptable payment system while maintaining security standards.
Emma Reynolds, Economic Secretary to the Treasury, welcomed the review, saying:
“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.”
Addressing Security Concerns
While increased limits could provide greater convenience, the FCA is prioritising fraud prevention. Contactless fraud accounted for £41.5 million in 2023, reflecting a 19% rise compared to 2022.
However, data from UK Finance indicates that contactless fraud remains a small proportion of overall unauthorised payment fraud, with the fraud-to-turnover ratio lower than that of general card fraud.
Existing regulations require financial institutions to reimburse consumers for unauthorised transactions made with lost or stolen cards. The Consumer Duty rules ensure that any changes made will continue to protect consumers from increased risks.
Government Support and Next Steps
The FCA’s review aligns with the UK government’s wider economic strategy to encourage digital innovation and reduce regulatory constraints.
This also follows recommendations from the 2023 independent Future of Payments Review, which suggested optimising contactless limits and eliminating unnecessary PIN prompts to enhance the consumer experience.
Feedback on the FCA’s engagement paper is open until 9 May 2025. Responses from businesses, industry experts, and consumers will play a key role in shaping any final decisions.
