The UK's financial watchdog is set to abolish the fixed £100 cap on contactless card payments in a major regulatory shift designed to boost consumer choice and economic growth.
From 19 March 2025, banks and card providers with robust anti-fraud systems will be permitted to set their own transaction limits for tap-and-go payments. The Financial Conduct Authority (FCA) also wants firms to offer customers the ability to set personal limits or disable contactless functionality entirely, a feature some banks already provide.
Driving Flexibility and Fraud Prevention
The overhaul aims to simplify larger purchases by reducing reliance on PIN codes. The FCA stated that contactless is now the preferred payment method for UK consumers. Data from Barclays underscores this trend, revealing that 94.6% of eligible in-store card transactions were contactless in 2024.
David Geale, the FCA's Executive Director of Payments and Digital Finance, said: "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."
The regulator believes the new flexibility will incentivise companies to enhance their fraud controls, offering greater protection. Crucially, existing safeguards will remain, with banks still required to reimburse customers for unauthorised fraud, such as transactions on a lost or stolen card.
Industry and Consumer Response
The change was one of roughly 50 proposals the FCA sent to Prime Minister Sir Keir Starmer in January, following a government request for ideas to stimulate the economy.
Industry leaders have welcomed the move. Kate Nicholls, Chair of UKHospitality, commented: "Making life easier for consumers is a positive for any hospitality and high street business. Lifting the limit can mean quicker and easier experiences for consumers."
Jana Mackintosh from UK Finance emphasised that contactless is a "very popular and secure way to pay." She noted that while immediate changes to the £100 limit are not expected, any future adjustments will be implemented cautiously, ensuring strong security remains paramount.
Further Changes to Cumulative Limits
Beyond the per-transaction cap, the current rules also include a £300 cumulative limit for contactless spending, triggered after five consecutive tap-only payments. Under the new framework, firms will have the scope to modify this cumulative cap as well.
The FCA says the reforms will allow the payments industry to better adapt to inflation, technological advances, and evolving consumer habits. The popularity of contactless has exploded, with Barclays reporting ten times more monthly contactless transactions in 2024 compared to 2015.
