The Financial Conduct Authority (FCA) has unveiled proposals that could see the current £100 cap on contactless card payments scrapped, potentially allowing unlimited transactions with a simple tap. The move would align contactless cards with digital wallets, which already have no set spending limit, and reflects the continuing shift in consumer payment habits.
If approved, the reforms could take effect as early as next year. Banks and card providers would be given the flexibility to set their own limits, or even abolish them entirely, while consumers could also be offered the option to set personal caps.
Since its introduction in 2007, the contactless payment limit has steadily increased from £10 to £100, with the most recent rise in 2021. Each increase has sparked debate over fraud and theft risks, and the FCA acknowledged its own analysis suggests higher limits would lead to greater fraud losses. However, the regulator argued that improvements in fraud detection and prevention systems should help mitigate the risks.
“People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently,” said David Geale, the FCA’s director of retail banking.
Despite these assurances, the proposals appear to run counter to consumer sentiment. A consultation found that 78 percent of respondents opposed changing the current rules, preferring the existing protections. Many consumers also value the use of a PIN as a safeguard or as a way to moderate spending.
While fraud remains a concern, the FCA noted that various safeguards are already in place. Cardholders are typically prompted to enter a PIN if they make a series of contactless payments that exceed £300 in total, or after five consecutive transactions. Many banks already offer the ability to reduce the £100 cap or disable contactless payments altogether.
The debate highlights a generational divide in payment preferences. Younger shoppers, particularly those aged 16 to 24, are far more likely to use mobile wallets with biometric verification. “I rarely carry cards anymore because I use my phone for everything,” said 24-year-old Demi Grady in Sevenoaks. Her mother, Carrie, took the opposite view, saying the removal of limits would “worry” her more than help.
Retailers are also split. Richard Staplehurst, owner of Harveys Menswear in Kent, welcomed easier payments but voiced concerns about being held liable for fraudulent transactions.
The FCA said the reforms are part of efforts to reduce barriers in the economy, in line with government calls to boost growth. Other countries, including Canada, Australia, and New Zealand, already allow banks to set their own limits.
The consultation on the proposals will remain open until 15 October.
