FCA plans to allow contactless payment limits above £100
Card providers are set to be given the powers to set their own limits on contactless payments, which are currently set at £100, under proposals set out by the City regulator.
The Financial Conduct Authority (FCA) has revealed that it will consult industry on whether the rules should be relaxed as part of its task to support growth and innovation.
The plans would allow card providers such as American Express and Barclaycard to set their own limits for contactless payments – or abolish them altogether.
The regulator said it wanted to offer financial companies greater “flexibility” over the £100 limit.
David Geale, executive director of payments and digital finance at the FCA, said “smarter payment technology” and controls on fraud had allowed it to move forward with its proposals.
“It’s the right time to let firms tailor contactless payments to fit their customers’ needs and drive innovation,” Geale said.
“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.”
Contactless payments key to driving growth
The FCA opened consultations on proposals earlier this year.
It said feedback indicated most companies would likely keep the £100 limit in the short term as it noted that some 85 per cent of Brits made contactless payments at least once a month.
Its review of contactless payments came as the Chancellor told the regulator to drive growth in the UK economy, though reforms would have to be aligned to the consumer duty – a “standard of care” in firms’ relationships with customers in retail financial markets.
The next phase of consultation is set to end in just over a month.
Concerns have been raised about the risk looser rules could have on fraud in the UK while contactless card providers may also be susceptible to cyber security risks.
Contactless card payments have the same protections as other card payments, meaning banks and payment companies must reimburse customers in cases of unauthorised fraud.
A report by UK Finance found that contactless fraud rates are lower for contactless payments than for general fraud.
The announcement comes as Chancellor Rachel Reeves is set to deliver a speech in front of investment giants backing small fintech and other digital payment companies.
Reeves is expected to lay out how she plans to make the UK “one of the most attractive places to invest”, with the FCA’s growth mission at the centre of her plans for the financial services sector.