Major change to contactless card payments could impact all shoppers

Contactless technology was first introduced in the UK in 2007 and has undergone many changes since

The contactless limit for card payments could be scrapped as the Financial Conduct Authority (FCA) considers whether the move would be beneficial for consumers, merchants and economic growth in the UK.

A proposed change by the FCA could completely change the shopping experience of millions. Contactless technology was first introduced in the UK in 2007 with just a £10 limit in place. By 2021, the threshold had reached £100, up from its previous £45.

Plans by the FCA mean entering a four-digit PIN to make a card payment could become even more of a rarity for shoppers. If approved, purchases which can cost more than £100 could be made with just the tap of a card, without having to insert for chip and pin.

The move would bring cards in line with payments made through digital wallets on smartphones which have no restriction. If approved, the latest plan could be put in place early next year.

The regulator has proposed the changes, despite the majority of consumers and industry respondents to a consultation favouring the current rules. Around 78% of consumers who responded said they did not want any change to the limits.

Various protections are already in place. In addition to the £100 single payment limit, consumers are often required to enter a PIN if a series of contactless transactions totals more than £300, or five consecutive contactless payments are made.

In an engagement set out by the FCA earlier this year, it was reported that 85 per cent of people in the UK make at least one contactless payment a month.

Businesses could be given greater control under the proposals being considered, and could promote innovative payment methods or fraud prevention solutions.

The proposals come after the FCA first announced it was exploring changes to the contactless limit in a letter to Sir Keir Starmer in January.

David Geale, executive director of payments and digital assets at the FCA said. “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, at the time added: “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.”

David Geale said the suggested changes to contactless limits were a result of recent advances in smart technology and fraud controls. In his most recent statement, he said: “We’re seeing smarter payment technology and more well-established fraud controls, so it’s the right time to let firms tailor contactless payments to fit their customers’ needs and drive innovation.

“While we wouldn’t expect to see immediate changes to limits by firms, they would have the flexibility to make payments more convenient for customers. People are still protected; even with contactless, firms will refund your money if your card is used fraudulently.”

The FCA said it did not expect any changes to be made quickly, and said technology advances mean shoppers could even be given the option to set their own limits. The proposals are out for consultation until October 15 2025.