£100 contactless card limit to be lifted

Millions of people could soon be able to set their own contactless card payment limits—or have no limit at all—under new rules announced by the regulator.

From March, bank and card providers will be empowered to set a maximum, or even unlimited, payment amount that can be made without entering a four-digit PIN. The Financial Conduct Authority (FCA) is also encouraging firms to allow cardholders to set their own personal limits or disable contactless payments entirely, a function some banks already offer.

The move comes despite the FCA's own research revealing little appetite among consumers for a change from the current £100 cap.

A Gradual Increase

The FCA stated that while it has the power to lift the cap, it does not expect all card providers to implement immediate changes when the rules come into force in March.

The transaction ceiling was set at just £10 when contactless card payments were first introduced in 2007. The limit was gradually increased to £15 in 2010, £20 in 2012, and £30 in 2015. The Covid pandemic prompted a jump to £45 in 2020, followed by an increase to £100 in October 2021.

While physical cards currently have a £100 limit, payments made via smartphones (such as Apple Pay or Google Pay) often have no limit, as they are secured by biometric features like fingerprint or Face ID.

Security Concerns 🔒

Concerns have been raised that physical cards with higher limits could become attractive targets for thieves and fraudsters. Currently, a safeguard exists where a PIN is requested after a certain number of consecutive contactless transactions or a cumulative spend limit is reached.

David Geale, executive director of payments and digital finance at the FCA, sought to reassure the public, confirming that consumers would still be reimbursed if their money was stolen by fraudsters.

"Contactless is people's favoured way to pay," Mr Geale told the BBC's Today programme, though he acknowledged that tighter limits could "slow things down."

"What we want to do is give banks and payment providers more freedom to choose their own route to contactless payment, where they see little risk of fraud," he explained. "But what we're really encouraging is that they'll allow customers the freedom to set their own limits."

Other nations, including Canada, Australia, and New Zealand, already allow the industry to set its own contactless limits. Jana Mackintosh, managing director of payments and innovation at UK Finance, said: "Any changes made in the future will be made carefully and ensure robust security and fraud protections remain in place."

Temptation to Spend? 💳

According to the FCA's own consultation survey, 78% of respondents said they did not want any change to the current limits.

Analysts and researchers have warned that the added convenience of unlimited contactless payments could lead to "mindless" spending. This is reportedly a particular issue with credit cards, where consumers are spending borrowed money and accumulating debt.

Charities have also warned that unlimited contactless access could provide domestic abusers with an easy way to drain a survivor's bank account without triggering alerts.

Conversely, there are fears the move could hasten the transition to a cashless society, disadvantaging those who rely on notes and coins. In an effort to support access to cash as bank branches close, Cash Access UK announced on Friday the official opening of its 200th banking hub in Billericay, Essex.