What's happened
From March 2026, UK banks will be allowed to set their own contactless payment limits, replacing the current £100 cap. The move aims to respond to consumer demand, inflation, and technological advances, with banks encouraged to let customers set their own limits or disable contactless payments entirely.
What's behind the headline?
The FCA's decision to allow banks to set their own contactless limits will likely accelerate the shift towards more flexible payment options. This change will enable banks to respond more swiftly to inflation and technological developments, potentially increasing transaction sizes and convenience for consumers. However, it also raises concerns about fraud and security, as higher limits could make contactless payments more attractive targets. The emphasis on allowing consumers to set their own limits or disable contactless payments aims to mitigate these risks. Overall, this regulatory shift reflects a broader trend of deregulation in financial services, prioritizing consumer choice and technological agility over strict uniform limits. The success of this policy will depend on how effectively banks implement fraud controls and communicate these options to consumers.
What the papers say
The Guardian reports that the FCA's move will give banks the flexibility to respond to changing demands and technology, emphasizing that existing protections for fraud will remain in place. Sky News highlights that from March 19, banks with strong fraud controls can set their own rules, and consumers will be encouraged to manage their limits or turn off contactless payments. The Independent notes that the change is part of a broader plan to modernize payment regulations, with data showing a sharp rise in contactless transactions, which now account for the majority of in-store card payments. All sources agree that the move aims to balance convenience with security, but differ slightly in their emphasis—The Guardian focusing on regulatory flexibility, Sky News on consumer control, and The Independent on technological adaptation.
How we got here
The current contactless payment limit in the UK is £100 per transaction, with a £300 cumulative cap and a limit of five consecutive tap payments. These rules have been in place to balance convenience with security. The FCA's decision to relax these restrictions follows a surge in contactless usage, which increased significantly over recent years, with 94.6% of eligible in-store transactions being contactless in 2024, according to Barclays. The move is part of broader efforts to adapt financial regulations to evolving consumer behaviors and technological innovations.
Go deeper
More on these topics
-
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.
-
The Financial Conduct Authority is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.