Future of Contactless Payments: £100 Limit Under Review

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Future of Contactless Payments: £100 Limit Under Review

The future of contactless card payments in the United Kingdom looks set to change radically. Debate is brewing to eliminate the £100 cap on individual transactions. We’re excited that the Financial Conduct Authority (FCA) has landed. They soon intend to enable consumers to set or fully disable their contactless limit at scale. This occurs against the backdrop of changing consumer payment preferences and fear of fraud.

Contactless payments were introduced in the UK back in 2007 with a limit of just £10, although this has been raised multiple times since then. After allowing travel for free up to £15, the upper limit was increased to £15 in 2010, then £20 in 2012, and finally £30 in 2015. The impact of the Covid-19 pandemic led to a rapid increase to £45 in 2020. More recently still, in October 2021, the cap was raised again, this time to £100. These changes come in response to the growing demand for more convenience and contactless transactions, especially during the pandemic when consumers turned to digital payment options.

Consumer reactions to the government’s plans to remove the £100 limit are divided. Robert Ryan shared his thoughts on the existing system – a helpful budgeting prompt, at least. He noted,

“I feel more secure in what I’m buying and it does give me a bit of a prompt to make sure I’m not overspending on my tap-and-go.”

Carrie Grady expressed her concerns to the loss of the £100 limit. So this type of change is actually more dangerous than helpful, she explained, arresting, “

“It would worry me more than be of benefit if they were to lose the limit of £100.”

A poll released by the FCA supports these feelings. It demonstrates, for example, that 78% of respondents would like to maintain the existing contactless limits. Consumers often have to input a personal identification number (PIN) following the completion of five successive contactless payments in a row. They are required to enter a PIN when their total purchase amount is over £300.

The FCA has sought to assure consumers that appropriate safety measures are in place for contactless payments. David Geale of the FCA said that despite the shift to contactless payments, customers still have fraud protection, stating,

“People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently.”

Even with security assurances, other consumers aren’t convinced and are hesitant to trust their contactless payments. Read what Demi Grady learned the hard way in London when her phone battery died. This experience opened her eyes to how vulnerable we all are when we’re over-dependent on digital payments.

More than just the consumer appetite for contactless payments, any increase to the contactless payment cap would require significant changes to payment terminals. First, as they are currently programmed to automatically decline transactions over £100, substantial reprogramming would be needed to support any new limit.

It’s noteworthy that most banks have completely stepped up on consumer needs. They all recently started to let cardholders choose their own contactless limits—or turn the feature off entirely. Providing flexibility will better suit consumers’ different comfort levels with regard to contactless spending and security.

Stakeholders have been largely in agreement that contactless payment limits are actively being discussed. For consumers, lenders, and other financial institutions alike, the consequences of these proposed changes are being weighed. Finding the right balance between convenience and security continues to be a key factor in all of these discussions.

Marcus Reed Avatar
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