Regulatory Changes Allow Banks to Set Their Own Limits on Contactless Payments
The current £100 cap on contactless card transactions is set to be removed next year, enabling consumers potentially to make unlimited purchases without needing to enter a PIN, according to recent announcements by the UK’s financial watchdog.
At present, there is a cap on contactless card transactions, whereas mobile phone payments do not have such a limit. However, starting from 19 March, financial institutions and card issuers will have the authority to establish their own upper limits, as stated by the Financial Conduct Authority (FCA).
In addition to the per-transaction limit, there is also a cumulative cap of £300 or five consecutive taps, after which the customer must enter their PIN. Card issuers will now have the option to remove this restriction as well.
The FCA explains that these amendments will allow financial institutions to better meet the evolving needs of consumers, adapt to inflation, and integrate new technological advancements.
The regulator also emphasized that customers should have the option to set personal spending caps or disable the contactless feature altogether if they prefer. Although immediate widespread change is not anticipated, as most providers are expected to maintain their current limits for the time being.
Contactless payments were initially introduced in 2007 with a £10 limit, which has gradually increased over the years—to £15 in 2010, £20 in 2012, and then to £30 in 2015. The onset of the COVID-19 pandemic saw a significant rise to £45 in 2020, and most recently to £100 in October 2021.
An earlier consultation was held this year to discuss the latest increase in the contactless payment limit.
According to Barclays Bank research, 95% of all eligible in-store payments are now made contactlessly. Yet, a survey commissioned by the FCA revealed that 76% of consumers believe the limit should remain at £100 or lower, despite the increase in retail prices.
The FCA stated that this new rule would only apply to banks and card providers that demonstrate robust fraud prevention measures.
Existing consumer protection measures will continue, ensuring that in cases of unauthorized fraud, such as lost or stolen cards, customers will be entitled to reimbursement.
David Geale, the FCA’s executive director of payments and digital finance, remarked, “Contactless is the preferred payment method for many. We aim to ensure our regulations offer flexibility for the future and choice for both companies and consumers.”
Kate Nicholls, chair of the trade association UKHospitality, welcomed the change, noting it as beneficial for her members and other retailers. “Contactless is increasingly the payment method of choice for many, and removing the limit could lead to faster, simpler transactions for consumers,” she commented. “While many still favor cash or chip and pin, this modification introduces much-needed versatility for both providers and consumers.”
However, Richard Whittle, an economist at the University of Salford, cautioned that this convenience might lead to unintended financial consequences. “The ease of contactless payments might encourage consumers to make impulsive purchases, potentially leading to unwanted or unnecessary buying,” he observed. “This concern is particularly significant with credit cards, where individuals spend borrowed money and may accumulate debt.”
Similar Posts:
- Black Friday Alert: Debt Charities Warn Against Buy Now, Pay Later Temptations!
- Alert: Booking.com Scam Jeopardizes Your Reservation!
- Slash Holiday Expenses: 8 Smart Tips to Save Money and Reduce Card Costs
- Parking Fine Scams Surge: Drivers Alerted to Increasing Text Message Frauds
- Maximize Your Vacation Budget: 7 Essential Tips for Financial Bliss Abroad
