Major Overhaul for Contactless Payments as £100 Cap Lifted
A significant transformation in the way consumers pay for goods and services is imminent, with the longstanding £100 contactless card payment limit set to be abolished entirely from March 19. This pivotal change will empower banks and payment providers to establish their own transaction thresholds, while also offering individuals the ability to personalise their contactless spending limits according to their preferences.
Enhanced Flexibility and Personalised Controls
Under the current regulatory framework, any transaction exceeding the £100 contactless ceiling typically necessitates the entry of a four-digit PIN to verify identity and mitigate fraud risks. From March 19 onwards, this mandatory cap will be eliminated, granting financial institutions the autonomy to determine their own limits. Concurrently, many card issuers already permit customers to adjust their contactless limits or deactivate the function entirely, a feature that will become increasingly relevant post-change.
Presently, shoppers can execute multiple contactless payments under £100 within a single day; however, if cumulative purchases surpass £300, they may be prompted to input their PIN as an additional security measure. The forthcoming removal of the blanket limit is expected to streamline transactions, potentially accelerating checkout processes for higher-value items.
Evolution of Contactless Limits and Regulatory Backing
The contactless payment threshold has undergone a series of incremental increases since its inception in 2007:
- Initially set at £10 upon introduction
- Raised to £15 in 2010
- Elevated to £20 in 2012
- Increased to £30 in 2015
- Boosted to £45 in 2020
- Finally reaching £100 in 2021
The decision to abolish the limit was unveiled last year by the Financial Conduct Authority (FCA) following a comprehensive consultation period. The FCA estimates that approximately 85% of the UK population utilises contactless card payments monthly, citing advancements in fraud prevention systems as a key factor enabling this regulatory shift.
Industry Perspectives on the Change
David Geale, Executive Director of Payments and Digital Finance at the FCA, remarked: "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."
Kate Nicholls, Chairwoman of UKHospitality, expressed support: "Making life easier for consumers is a positive for any hospitality and high street business, and I’m pleased the FCA is bringing forward this change. Contactless has increasingly become the preferred payment method of choice for many people and lifting the limit can mean quicker and easier experiences for consumers."
Jana Mackintosh, Managing Director of Payments and Innovation at UK Finance, added: "We welcome the FCA’s move to give banks and payment providers greater flexibility over contactless limits in the future. 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 update marks a substantial step towards modernising payment systems, aligning with consumer preferences for convenience while maintaining robust security protocols. Shoppers and businesses alike should prepare for a more adaptable contactless payment landscape commencing March 19.
