On Mar. 14, UK FCA issued paper on potentially removing £100 limit.
FCA issued an engagement paper on contactless payment limits which seeks views on removing £100 contactless limit to benefit consumers, merchants, economic growth.
Forms part of the FCA's work, announced in letter to Prime Minister, to support growth.
Follows UK FCA Jan. 2025 reply to Prime Minister on supporting growth, see #240940.
Background
Contactless cards now part of the general payments landscape, with a majority of card transactions now contactless (85% of people in UK make contactless payments).
When consumers can make contactless payments easily and safely it encourages more contactless transactions and helps built trust in the UK payments system.
However, they also carry risks, including potential for fraudulent payments if a card is lost or stolen, however such fraud is very small part of total unauthorized fraud.
FCA currently sets limits on the value and number of contactless payments that can be made before requiring authentication,which is typically done via the entry of a PIN.
Most banks and other payment services providers (PSPs) default to the regulatory limits, but they can set their own contactless limits within these limits if they choose.
Engagement Paper
Sets out the FCA's emerging policy thinking on how it may use its rule-making powers in relation to payments, feedback will create dialog between FCA and stakeholders.
Paper suggests how the regulator could approach contactless payments in future to give greater flexibility to PSPs, consumers, and businesses to decide contactless limits which work for them, while also reducing the risk of fraud and promoting innovation.
Options include allowing PSPs to take a risk-based approach to contactless payments, as well as significantly increasing existing regulatory contactless limit, or removing it.
Any changes would need to support good customer outcomes under Consumer Duty.
FCA will focus on how consumers are protected if changes made to contactless limits.
Existing legislation requiring firms to reimburse consumers in cases of unauthorized payment fraud, e.g. if their cards are lost or stolen, will remain in place.
Engagement paper asks stakeholders their preferred option for future regulation of contactless limits: introducing a new risk-based exemption for in-person transactions; amending limits in current exemption; relying on Consumer Duty following law change.
No change - keep things as they are; or alternative options not raised in the paper.
Seeks input on key risks and benefits of the different approaches, and which would reduce fraud while minimizing payment friction; support innovation and economic growth; meet FCA's statutory objectives; are there any competition considerations.
Effectiveness
The closing date for the submission of feedback to engagement paper is May 9, 2025.
Responses will inform further development of proposed rules or amendments, which the FCA will consult on formally in due course.
