UK Banks to Maintain £100 Contactless Limit Despite Regulatory Change
A significant update has been issued regarding contactless payment limits in the United Kingdom, with major financial institutions confirming they will maintain existing restrictions despite regulatory changes coming into effect next week.
The Regulatory Shift
The Financial Conduct Authority (FCA) is implementing changes from March 19 that will allow banks and payment providers with robust fraud controls to set their own contactless payment limits, moving away from the current universal £100 maximum per transaction. This represents a fundamental shift in how contactless payments are regulated in Britain.
Consumer expert Rebecca Wilcox explained on BBC Morning Live: "The Financial Conduct Authority, which regulates all banks, has said we're going to move to unlimited spend on contactless. This is happening from March 19 this year."
Banking Industry Response
Despite the regulatory change, all major UK banks have confirmed they will maintain the current £100 limit for the foreseeable future. Wilcox revealed: "We have spoken to Lloyds Banking Group, HSBC, Santander, Barclays, NatWest and Monzo, and every single one of them says they are sticking with the £100 limit."
The expert elaborated that while the regulatory framework is changing, banks are responding to customer preferences and existing infrastructure. "Banks set their limits based on what customers want," she noted, adding that changes would not occur "in the immediate future."
Historical Context of Contactless Limits
Contactless payment technology has evolved significantly since its introduction in 2007. Wilcox provided historical context: "It first came in back in 2007 with a £10 limit. That was raised to £15 in 2010, £20 in 2012, £30 in 2015."
The COVID-19 pandemic accelerated adoption, with the limit increasing to £45 in 2020 before jumping to £100 in October 2021, where it has remained since.
Current Payment Landscape
Contactless payments now dominate UK transactions, with Wilcox revealing: "74 percent of all UK card transactions are now contactless. We've all forgotten our PIN except for the 10 percent who still use chip and PIN. The other 16 percent is just online payment."
Interestingly, despite the £100 limit, the average contactless transaction remains modest at £16.83, raising questions about the necessity for higher limits.
Regulatory Rationale
The FCA's changes are designed to provide flexibility for future developments. David Geale, executive director of payments and digital finance at the FCA, 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."
The regulator believes allowing greater flexibility will incentivise firms to enhance their fraud prevention measures, ultimately providing greater consumer protection. Existing safeguards will remain, including reimbursement requirements for unauthorised fraud cases involving lost or stolen cards.
Consumer Protections and Options
Under the new framework, firms are encouraged to allow customers to set their own contactless limits or disable the feature entirely, options already available through many high street banks. The cumulative contactless approach - currently limiting users to £300 or five consecutive transactions before requiring authentication - may also become more flexible under the new rules.
Market Adoption and Future Outlook
Contactless payment adoption has surged dramatically in recent years. According to Barclays data, 94.6 percent of eligible in-store card transactions were contactless in 2024, with monthly transaction volumes ten times higher than in 2015.
The contactless limit review was among approximately 50 measures outlined by the FCA in a January letter to Prime Minister Sir Keir Starmer aimed at supporting economic growth. Following consultation ending October 15, the regulator anticipated most firms would maintain existing limits based on industry feedback.
Wilcox summarised the situation: "This has come in, the FCA's starting, and we're all thinking about it, but actually banks set their limits based on what customers want. So if we all start wanting to spend more, maybe they'll change it, but not in the immediate future."
