New rules could remove the GBP 100 limit on contactless payments

Contactless payments limit could be removed

The contactless card payment limit has been raised several times over the years and is currently GBP 100 in the UK. When the price is over that sum, cards require a PIN for authentication purposes.

The Financial Conduct Authority (FCA) sent a letter to the Government on the steps it is taking to support economic growth. In the letter, FCA wrote that the regulator could remove the contactless limit, drawing from US experience and offering firms and customers greater flexibility. This would also create a more equitable environment for digital wallets.

The FCA said another step it could take is to set new digital service standards, such as requiring firms to accept electronic verification of death to speed up bereavement claims in insurance.

Representatives of Which?, a UK-based consumer organisation, agree with the FCA and the government in exploring ways to improve economy, as they note that viewing consumer protections as barriers to growth is misguided.

Well-designed regulations that enable consumers to switch to more efficient products and services without the fear of being at a loss are essential to creating markets that reward investment and innovation, according to Which?.

Constraints of the contactless payments for fraud prevention

In Singapore, Canada and Australia, the contactless limit has been the equivalent of GBP 100 for some time with no significant increase in fraud since the raised limit. Unless consumers are negligent, they are not liable for unauthorised contactless payments.

Regardless of the limit amount, cards that use contactless payments are at the same risk of being stolen. A thief needs the information from both sides of the card to be able to use it without the owner of the card knowing, and reading this information can be challenging, as they have to be close. Additionally, by using contactless payments via smart devices, card and payment information is protected by device securities including PIN, password, and biometric authentications.

Even if the card itself is stolen, contactless cards have security checks which means from time to time the cardholder has to enter their PIN to verify that they are the genuine owner. Thieves will only be able to spend a maximum of GBP 100 in any single contactless card transaction and a maximum of GBP 300 across multiple contactless transactions before they must enter a PIN. Regardless of this, thieves do not have time to make purchases, as the majority of card owners report it to their banks and get their card blocked as soon as they are aware that it is missing. Moreover, if any fraudulent activity was reported, the recipient could be easily identifiable, and the money would be taken back.