The UK's financial regulator is set to abolish the universal cap on contactless payments, handing power to individual banks to set their own transaction limits. This significant shift, announced by the Financial Conduct Authority (FCA), will take effect from 19 March 2025.
End of the Universal £100 Cap
Under the current system, a single transaction using a physical contactless card is limited to a maximum of £100. The new rules will allow banks and card providers with robust fraud prevention systems to determine their own limits. This move is part of a broader review by the FCA, initiated after the Labour government urged regulators to prioritise economic growth.
The consultation, which began in earnest earlier this year, concluded that offering firms greater "flexibility" over the limit was the best path forward. David Geale, the FCA's Executive Director of Payments and Digital Finance, stated: "Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers."
Boosting the High Street and Consumer Choice
The change is expected to provide a welcome boost to Britain's retailers and hospitality sector by facilitating easier, tap-and-go payments for higher-value items. Kate Nicholls, Chairwoman of UK Hospitality, welcomed the decision, saying that "making life easier for consumers is a positive for any hospitality and high street business."
While banks will be required to communicate any changes to their customers clearly, the FCA is also encouraging them to offer consumers more control. This could include options for individuals to set a personal limit or even turn the contactless function off entirely on their cards.
Security and Popularity of Contactless Payments
The decision follows a dramatic surge in the use of contactless technology. Data from Barclays indicates that nearly 95% of all eligible in-store card transactions were contactless in 2024. Furthermore, the FCA's own consultation in September revealed that 85% of Britons use contactless payments at least once a month.
Industry experts have been quick to reassure the public that security will remain paramount. Jana Mackintosh, Managing Director of Payments and Innovation at UK Finance, commented: "Contactless is a very popular and secure way to pay. While we do not expect to see any immediate change to the £100 contactless limit, any changes made in the future will be done carefully and ensure strong security and fraud controls remain in place."
This regulatory shift was catalysed by a formal letter from the government to regulators on 24 December 2024, calling for watchdogs to "regulate for growth." The FCA responded with a list of 50 potential reforms, with amendments to the contactless limit featuring prominently.
