FCA proposes lifting £100 contactless cap, lets banks set limits

The Financial Conduct Authority has proposed removing the statutory £100 cap on contactless card payments and allowing banks and other payment providers to set their own limits, potentially enabling high-value purchases to be completed with a tap of a card.

Under the proposals, firms would be permitted to authorise higher-value contactless transactions where their fraud detection systems deem the payment low risk. The FCA said providers would carry the burden for losses if contactless transactions were used fraudulently and that any change would rely on continued improvement in fraud detection. If approved, the measure could be introduced early next year, after a consultation that runs until 15 October.

Contactless payments were introduced in the UK in 2007 with a £10 limit and have been raised several times: to £15 in 2010, £20 in 2012, £30 in 2015, £45 in 2020 and £100 in October 2021. The FCA said parity with digital wallets, which have no statutory limit and rely on biometric checks such as fingerprint or face ID, was one rationale for allowing firms flexibility as technology and prices change.

The regulator acknowledged that its own analysis indicates raising or removing the cap would increase fraud losses, but argued that better detection and prevention systems would mitigate risk. "People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently," said David Geale of the FCA.

Current industry controls include requirements to enter a PIN if a series of contactless transactions totals more than £300, or after five consecutive contactless payments in some cases. Retail payment terminals are also generally programmed to decline contactless card transactions above £100; those terminals would need to be reconfigured if the cap were lifted.

The FCA said it did not expect immediate widespread changes but that providers would welcome the flexibility to raise limits over time. Many banks already allow customers to set a lower contactless limit or to switch contactless functionality off, and the FCA expects such choices to be widely available.

Consumers and industry respondents to the FCA's consultation were broadly opposed to changing the rules, with some 78% of consumer respondents saying they did not want the limit altered. Public reaction captured on the high street reflected that split. Demi Grady, 24, said she largely uses her phone to pay and favoured fewer restrictions: "I rarely bother carrying my cards around anymore because I used my phone for everything." Her mother, Carrie, said removing the cap would be worrying: "It would worry me more than be of benefit if they were to lose the limit of £100." Robert Ryan, a shopper interviewed after buying a jacket, said entering a PIN could serve as a budgeting prompt: "I feel more secure in what I'm buying and it does give me a bit of a prompt to make sure I'm not overspending on my tap-and-go."

Retailers expressed mixed views about the proposal. Richard Staplehurst, a shop owner, said most customers now paid via a device and welcomed moves that remove obstacles to payment, but he added he would not want to be left out of pocket if fraud occurred.

The FCA framed the proposal as part of a wider effort to modernise payments and respond to government calls to remove unnecessary regulatory restrictions to support economic growth. Other countries, including Canada, Australia and New Zealand, already allow industry to set contactless limits.

Any change will depend on the consultation outcome and how firms demonstrate they can maintain low-risk payments and adequate consumer protection. The FCA said consumers would continue to benefit from reimbursement protections where fraud occurs, and that providers should offer customers the ability to tailor or disable contactless settings. The consultation closes on 15 October, after which the regulator will consider responses before finalising any rules.