UK Financial Regulator Considers Overhauling Contactless Payment Limits

The UK’s Financial Conduct Authority (FCA) has launched a review of existing contactless payment limits, exploring options to enhance consumer flexibility and reduce fraud risks. The regulator is soliciting feedback on potential changes until May 9, 2025.  

Currently, the UK enforces a £100 limit for individual contactless transactions and a £300 cumulative limit across multiple transactions, requiring PIN authentication after five consecutive contactless payments. However, the FCA is now considering a significant shift, driven by the widespread adoption of contactless payments, with 85% of Britons using them monthly, according to UK Finance.  

The FCA’s proposed changes aim to empower consumers and payment service providers (PSPs) with greater control over transaction limits. Key options under consideration include:

• Increasing or Removing Limits: The FCA is evaluating the feasibility of raising the £100 limit or eliminating it entirely, allowing for larger contactless transactions.  
• Personalized Limits: PSPs could be authorized to set individual consumer limits based on risk assessments, tailoring the experience to each user’s “risk appetite.”  
• Risk-Based Exemptions: The FCA is exploring a new risk-based exemption that would allow PSPs to manage contactless limits independently, provided they maintain low fraud rates.  
• Reliance on Consumer Duty: The regulator is also considering leveraging the existing Consumer Duty, implemented in 2023, as the primary framework for contactless payment limits, rather than imposing specific rules. This would grant firms increased flexibility while ensuring they prioritize customer financial interests.  

A new journey

The FCA emphasizes that these potential changes are designed to “smoothen the consumer journey by not having to authenticate via a PIN as frequently, while limiting the possibility of fraud.”  

The FCA is actively seeking input from a broad range of stakeholders, including consumer groups, banks, PSPs, and retailers, to ensure that any changes made are in the best interests of consumers and the wider financial system. The deadline for feedback is May 9, 2025.