The Financial Conduct Authority (FCA) is reviewing whether the £100 contactless limit should be removed or increased, aiming to give consumers and businesses more flexibility while keeping fraud protections in place. The consultation is part of wider efforts to encourage innovation in payments and support economic growth.
Contactless payments are now the default for in-person transactions in the UK, with 85 per cent of people using them at least once a month, according to UK Finance, a trade association representing the financial services industry in the UK.
There are now 149 million contactless cards in circulation, covering 93 per cent of debit cards and 94 per cent of credit cards. At the same time, mobile wallets such as Apple Pay and Google Pay have made it possible to pay without a PIN for higher-value transactions, raising questions about whether card limits remain necessary.
Fraud is a key consideration. Contactless fraud accounted for £41.5million in losses last year, up 19 per cent from 2022. However, UK Finance reports that fraud is growing more slowly than contactless transaction volumes, and remains a small part of total unauthorised fraud.
The FCA has outlined several options: scrapping limits entirely, allowing payment providers to set their own thresholds based on fraud controls, or raising limits to better reflect inflation and spending habits. The consultation runs until May 2025, and payment industry leaders are weighing in on what the changes could mean for security, merchant operations and customer experience.
Contactless payments are now the norm
Jana Mackintosh, managing director of payments and innovation at UK Finance, sees the FCA’s consultation as a positive step but believes that setting contactless limits should be left to the industry rather than imposed by regulators.
“Contactless payments are popular and 85 per cent of people are now using this payment method on a regular basis. As well as bank cards, an increasing number of people are using smartphones and watches to make contactless payments
“Having a contactless limit is important in terms of fraud prevention, but we believe overall limits and the number of times a customer needs to enter a PIN should be determined by industry rather than the regulator.
“Banks know their customers and can strike the right balance between protecting them and giving them fast and secure payment options.”
Fraud risks rise as limits increase
While the potential for greater convenience is clear, Ryta Zasiekina, founder of payments company Concryt, warns that higher contactless limits could make fraud prevention more challenging. Concryt provides fraud detection and risk management solutions for merchants, and Zasiekina points to international examples where increased limits have led to a rise in fraud attempts.
“While the removal of the £100 contactless limit is a positive development for consumer convenience, it also introduces new challenges in fraud prevention. Higher transaction values will inevitably attract fraudsters, and globally, we’ve seen those higher contactless limits correlate with increased fraud attempts, particularly in regions like Europe and North America.
“It’s vital that merchants adopt advanced fraud detection and prevention measures, real-time transaction monitoring, and behavioural analytics to mitigate risks. By staying proactive, merchants can maximise the value of contactless transactions while minimising risks.”
A win for wearable tech, but security is key
Derrick Lynagh, head of strategic sales and partnerships at MuchBetter, a digital payments company known for its wearable payment devices, sees the potential removal of the contactless cap as a major opportunity for wearable payment providers.
“Whether they’re using a contactless card, scanning QR codes or tapping to pay with their smartphone or wearable item like our ceramic ring, consumers will be able to buy and make larger-value contactless payments in a much wider variety of locations outside of the usual high-footfall-low-value locations, such as luxury goods or home furnishings.
“However, consumers should remain vigilant and take advantage of security features like transaction notifications, biometric authentication and the ability to remotely disable payment capabilities through their bank or wallet app.
“MuchBetter is excited to explore new opportunities created by this development, ensuring merchants can offer their customers the most convenient and secure payment options available and unlock the full potential of contactless payments.”
Merchants must update systems to keep up
For merchants, the shift towards unlimited contactless payments could streamline operations, particularly in high-traffic locations like supermarkets, restaurants and event venues.
Kamran Hedjri, CEO at PXP, a global payments technology provider, suggests that embracing this change could help businesses reduce checkout times and improve customer experience.
“Removing the £100 contactless limit is a natural progression in the global shift toward cashless societies. By enabling higher-value contactless transactions, merchants can reduce checkout times, improve customer satisfaction, and streamline operations. This is particularly valuable in high-traffic environments like supermarkets, restaurants, and events.
“For merchants, updating their current payment systems is essential – while contactless fraud remains a small fraction of overall payment fraud, it’s crucial to balance convenience with security to maintain consumer trust, which may involve additional security steps for transactions above certain thresholds or if a system spots an unusual behaviour. As a global tech platform, PXP is helping merchants maximise the value of contactless transactions by ensuring our platforms can handle increased volumes securely.”
A step towards the global contactless trend
Robin Anderson, head of product management at Tribe Payments, a payments technology provider, sees the FCA’s proposal as aligning the UK with global trends. He notes that some markets have already lifted contactless limits, resulting in increased transaction volumes and higher average spending.
“The FCA’s proposal to scrap the £100 contactless limit reflects a global trend toward higher-value contactless transactions, and we anticipate a notable increase in both the range and average transaction values for contactless payments. In markets like Australia and Canada, where contactless limits have been raised or removed, we’ve seen a substantial increase in both transaction volumes and average ticket sizes.
“Merchants, particularly in sectors like retail, hospitality, and travel, will benefit from customers being able to make larger purchases seamlessly. This could boost revenue, especially for businesses that previously had to rely on chip-and-PIN or cash for higher-value transactions.
“The recent announcement by Apple to open up its iPhone contactless infrastructure to third-party developers is another game-changer. This move will further accelerate the adoption of contactless payments, enabling innovative payment solutions and enhancing the customer experience.
“But merchants must ensure their systems are equipped to handle higher-value contactless transactions as this change will require upgrades to payment terminals and backend systems to support enhanced security protocols like Strong Customer Authentication (SCA) for higher-value transactions.”
Why businesses should embrace higher contactless limits
Higher contactless limits wouldn’t just benefit consumers, they could also give businesses an edge by increasing sales, improving customer experience and reducing checkout times, says John Clark, head of product at takepayments, a global payments company.
“We saw contactless payments initially surge in popularity during the pandemic but speed and ease have made them a lasting consumer favourite – now outpacing traditional Chip & PIN and cash transactions. Our previous research highlighted that contactless payments are by far the most preferred payment method in the UK.
“We surveyed over 1,000 UK consumers and found that nearly half (48 per cent) favour contactless card payments whilst 20 per cent chose mobile wallets. Only 11 per cent chose Chip & PIN. 88 per cent of the respondents said that convenience was the main reason they preferred contactless payments.
“Fortunately, businesses won’t need to manually update their payment systems as the change will occur automatically in line with any changes to the limit and there’s a host of other reasons businesses should welcome the proposal.”
Clark says t higher contactless limits would make payments more accessible, speed up checkouts, and encourage higher spending. He points out that card payments already drive larger purchases compared to cash and that digital transactions are becoming more secure as fraud prevention improves.
He lists reasons such as greater accessibility for customers, faster checkouts and the potential for higher spending, as studies show consumers tend to spend more on cards than cash. While fraud concerns remain, he argues that digital payments are becoming increasingly secure, with banks and payment providers continually improving fraud prevention measures.
What happens next?
With the FCA inviting feedback until 9 May 2025, the outcome of this consultation could set a new direction for contactless payments in the UK.
If limits are scrapped or raised significantly, payment providers and merchants will need to adapt quickly, whether that means upgrading fraud controls, refining risk models, or rethinking customer security measures.
