The Financial Conduct Authority (FCA) has announced its plans to provide banks and payment providers with more flexibility when it comes to setting contactless payment limits.
Through this new approach, the regulator aims to serve evolving consumer behaviour and further develop payment technology.
The standards come after a public consultation on contactless payments, with them being part of a broader strategy by the FCA to facilitate economic development and prioritise digital solutions.
Removing red tape
According to the FCA, banks and payment providers with solid fraud controls are set to be able to set their own limits for contactless payments. This will enable them to better respond to consumer demands, inflation, and emerging technologies. Additionally, the regulator encourages them to allow customers to set their own limit or turn contactless off.
This new approach to contactless payments follows an increase in the use of such methods, with them being the dominant option for individuals paying in shops. Recent data from Barclays showcases that approximately 95% of all eligible in-store card transactions were made using contactless payments in 2024. This reflects how tap-to-pay transactions have positioned themselves as the default for spending.
Furthermore, even if the updated rules will facilitate more flexibility for banks and payment providers, the FCA underlined the importance of fraud prevention for maintaining the security of transactions. Financial services providers will continue to be required to implement solid controls for processing contactless transactions. The FCA mentioned that this increase in flexibility should come as an incentive for companies to advance their fraud defences.
When it comes to consumers, the regulator does not plan to make any changes to their safeguards. In case of unauthorised fraud, including cards being lost or stolen, customers will be reimbursed. Through this, the FCA ensures that higher or variable contactless limits do not negatively impact consumer protection.
The regulator’s standards will take effect in March 2026 and, from that point onwards, companies will have to decide if and when they adopt new contactless limits. The FCA underlines that any modifications need to be communicated by firms to their customers.
