The fiscal universe in the United Kingdom is on the verge of radical change. In the UK, the Financial Conduct Authority (FCA) is set to raise the £100 cap on contactless card payments. On March 21, 2024, banks and card providers will obtain the ability to impose a maximum single payment. As a result of this change, they will no longer have to enter a four-digit PIN for these transactions. The Federal Trade Commission applauded this move as a step to address the inaccessibility to vulnerable customers who often have difficulty handling cash payments.
Until now, the transaction limit for contactless payments has slowly increased over time, starting from their launch. The ceiling was first set at £10 in 2007. It was raised first to £15 in 2010, then to £20 in 2012 and finally to £30 in 2015. However, due to the pressures of the Covid-19 pandemic, the limit was temporarily raised dramatically to £45 in 2020. In October 2021, they finally raised the limit to a mere £100. This amendment acknowledges the market shift towards meeting consumer demands for increasing access to contactless payments.
David Geale, the executive director of payments and digital finance at the FCA, emphasized the importance of flexibility in payment methods. He stated,
“Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers.”
This latest shift gives financial institutions more flexibility and freedom to determine the right payment limits, while still ensuring security measures are strong. Geale provided confidence to consumers by reminding them that they’re already protected against fraud. He said even if fraudsters defraud them of their money, there is a provision for them to receive a refund.
Jana Mackintosh, managing director of payments and innovation at UK Finance, which represents banks, noted that the changes will aim to support consumers effectively. She remarked,
“Any changes made in the future will be done carefully and ensure strong security and fraud controls remain in place.”
In implementing this far-reaching policy shift, we’re in the process of creating community-controlled, shared banking hubs. These hubs will make it easier for vulnerable customers to get cash. This initiative is indicative of a much larger trend that we’ve been seeing in countries like Canada, Australia, and New Zealand. In these countries, it is the industry—not regulatory agencies—that sets contactless card limits.
Smartphone users may now make payments above a specific threshold without entering a PIN. This would be remarkable enough given that contactless cards are limited to a maximum spend of £100. This mismatch underscores an increasing imperative for transparency and uniformity in payment methods offered to customers.
