Contactless Payment Limits to Be Lifted Offering More Flexibility for Consumers
The £100 cap on contactless card payments in the UK is set to be removed, allowing banks and card providers with robust fraud safeguards to establish their own limits. This change, initiated by the Financial Conduct Authority (FCA), will take effect from 19 March, 2024.
New Payment Structure
As part of the FCA’s initiative, consumers will now have the option to define their own payment limits or completely disable contactless transactions, a feature already available with some banks. This alteration aims to simplify larger purchases where customers can tap their cards instead of entering a PIN.
The FCA has noted that contactless payment has become the preferred method among consumers. By granting more flexibility, the FCA expects to motivate financial institutions to enhance their fraud prevention measures, ultimately boosting consumer security and confidence.
Growing Popularity of Contactless Payments
Recent data from Barclays reveals a significant uptick in contactless payments, with 94.6% of eligible in-store transactions being made using this method in 2024. In fact, the number of monthly contactless transactions has surged tenfold since 2015, highlighting a clear consumer preference.
Industry Responses
Financial experts and industry figures have largely supported the proposed changes. David Geale, FCA’s executive director for payments and digital finance, stated, “Contactless is people’s favoured way to pay… our rules must adapt to provide flexibility for the future.”
Kate Nicholls, chairwoman of UKHospitality, emphasized that easing payment processes is advantageous for both consumers and businesses, suggesting that the revised limit could lead to quicker transactions in hospitality and retail settings. She noted that “lifting the limit can mean quicker and easier experiences for consumers.”
Reflecting on the importance of safety, Jana Mackintosh from UK Finance added that, although the immediate effect on the £100 limit might be minimal, any future adjustments will be made cautiously to maintain strong security protocols.
Security Measures Remain Intact
Under the current regulations, banks and card issuers enforce a £300 limit on cumulative contactless transactions, allowing up to five consecutive tap-only payments. The forthcoming reforms will also enable companies to modify this cumulative cap. Additionally, existing protections will ensure that banks are obligated to reimburse consumers in cases of unauthorised fraud, such as loss or theft of cards.
Background
This reform is part of a broader set of proposals outlined by the FCA in a letter to Prime Minister Sir Keir Starmer, aimed at stimulating economic growth. The changes have been anticipated as a proactive response to evolving consumer demands, inflationary pressures, and advancements in payment technology.
Source: Original Article
