Banks to set own contactless limit as FCA scraps cap
UK banks will be able to set their own contactless limits under new rules set to be introduced by the City watchdog next year.
In the current system, banks place a cap on payments of up to £100 per transaction when consumers are using physical contactless cards.
But changes introduced by the Financial Conduct Authority (FCA) will permit banks with strong fraud controls to set their own limits on contactless from 19 March.
The review into the contactless cap began as part of the regulator’s review into policies it could reform to drive economic growth following a rallying cry from the Labour government.
Proposals set out earlier this year revealed the FCA wanted to offer companies greater “flexibility” over the £100 limit.
FCA takes up growth mission
Banks changing their rules will have to communicate it to customers, though they are also being encouraged to allow consumers to set their own limit or turn contactless of altogether.
It follows a surge in popularity of contactless spending with figures from Barclays indicating near 95 per cent of eligible in-store card transactions were contactless in 2024.
As part of its consultation in September, the FCA said one 85 per cent of Brits made contactless payments at least once a month.
The move could mark a boost for Britain’s high streets, allowing big ticket purchases to be made with ease.
UK Hospitality chairwoman Kate Nicholls welcomed the news stating “making life easier for consumers is a positive for any hospitality and high street business”.
Jana Mackintosh, managing director of payments and innovation at banking industry body UK Finance, said: “Contactless is a very popular and secure way to pay.
“While we do not expect to see any immediate change to the £100 contactless limit, any changes made in the future will be done carefully and ensure strong security and fraud controls remain in place.”
The government wrote to regulators on 24 December 2024 with a call for watchdogs to “regulate for growth”.
In response, the watchdog listed 50 reforms it would explore which could help pull the lever – with amendments to the contactless limit included in the policy reforms.
David Geale, executive director of payments and digital finance at the FCA, said: “Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers.”