Contactless card limits set for shake up as FCA proposes greater flexibility

The Financial Conduct Authority (FCA) is poised to bring about sweeping changes to contactless payments in the UK, with proposals to allow banks and card providers to raise or even remove the current £100 limit on tap-and-go transactions. These plans, which have been put out for consultation until October, could see banks given the freedom to set their own caps for customers in a move designed to offer greater convenience and encourage innovation in payments.

Since the introduction of contactless cards in 2007, spending restrictions have gradually increased—starting from a modest £10 per transaction, climbing to £15 in 2010, and incrementally rising to £100 by October 2021. At present, rules also limit shoppers to a maximum of £300 in contactless transactions per day, with some providers setting lower self-imposed caps or requiring a PIN after a set number of payments.

David Geale, executive director of payments and digital finance at the FCA, stated that improvements in payment technologies and robust fraud controls make this the right moment for providers to tailor contactless options to individual customer needs. The approach would also bring plastic cards more closely in line with digital wallets on smartphones, which currently have no transaction limit.

Public response to the FCA’s engagement paper, launched this March, indicates solid support for a higher cap, with preference for a ceiling somewhere between £150 and £250 per transaction. The FCA maintains that people remain well-protected, emphasising that even if contactless cards are misused or stolen, banks are required to refund fraudulent payments. Data from UK Finance’s annual fraud report show the risks remain low, at just 1.3p lost per £100 spent contactlessly compared to 6p per £100 from all unauthorised fraud.

The FCA believes its flexible proposal provides a timely opportunity to modernise payment systems and respond to shifting consumer choices as the trend away from cash accelerates. Should these plans win approval, the changes could take effect as early as next year, ushering in a new era for tap and pay spending at the tills.