The Financial Conduct Authority (FCA) is raising the limit for contactless card payments from March 19, as reported by the Daily Express. Current regulations allow individuals to make transactions of up to £100 per transaction when using physical contactless cards, the report states. Changes being implemented next week by the FCA will enable banks and payment providers with robust fraud controls to establish their own limits, according to the Daily Express. Crucial updates have been issued by banks including Lloyd, HSBC, Santander, Barclays, Natwest and Monzo, the Daily Express reports.
Consumer expert Rebecca Wilcox explained the shift. 'Basically, the Financial Conduct Authority, which is the regulator for all the banks, has said we're going to go to an unlimited spend on contactless,' she said. 'This is happening from March 19 this year. So you used to have £100 limit for every tap now it's going to be limitless but not now and I'll explain why.' She added, 'It first came in back in 2007 and that was a £10 limit. Doesn't that seem lovely and innocent?'
Basically, the Financial Conduct Authority, which is the regulator for all the banks, has said we're going to go to an unlimited spend on contactless. Now, this is helpful for someone like me who is always forgetting their chip and pin but for most people actually we're not going to see a great change.
The contactless limit first came in back in 2007 with a £10 limit, Wilcox noted. The limit increased to £15 in 2010, £20 in 2012, and £30 in 2015, she said. 'Covid came in in 2020, which meant people didn't want to touch things, so it went up to £45 and then again jumped quite quickly in October 2021 to £100, and that's where we've stuck for a bit,' Wilcox noted.
Contactless payments now dominate UK transactions. 'Did you know that 74 per cent of all UK card transactions are now contactless,' Wilcox said. '10 per cent of people still use Chip and PIN. The other 16 per cent is just online payment.' The average spend for a contactless tap is £16.83, Wilcox observed. 'Weirdly, the average spend for your tap is £16.83,' she said.
This is happening from March 19 this year. So you used to have £100 limit for every tap now it's going to be limitless but not now and I'll explain why. It first came in back in 2007 and that was a £10 limit. Doesn't that seem lovely and innocent?
This average prompted questions about the need for higher limits. Presenter Gethin Jones remarked, 'If that's the average, you have to wonder why we have to go beyond £100 for the contactless limit.' Wilcox clarified the FCA's rationale. 'It is because the Financial Conduct Authority has said it is looking at future proofing itself for flexibility with banks, and payment providers,' she explained. 'So we don't know what's going to happen with inflation. It is reflecting the changes in consumer demand and the banking response to inflation. It needs to allow for new technology to come in, so it's not going to happen in the immediate future.'
Industry feedback indicates that most banks will keep to current limits because that's what they're set up for, Wilcox said. The existing £100 limit is going to remain for many customers even after this change comes in from March 19, she summarized. 'Now, this is helpful for someone like me who is always forgetting their chip and pin but for most people actually we're not going to see a great change.'
Key details remain unclear, including which banks or payment providers plan to raise their contactless limits above £100, and by how much. Additionally, the specific new fraud controls banks are implementing to allow higher limits have not been disclosed. The FCA's decision aims to provide flexibility for future economic and technological shifts, though the timeline for when unlimited contactless spending might actually be implemented is uncertain. The regulator's move follows a steady increase in contactless usage since its introduction over a decade ago.