FCA confirms contactless payments rise from £45 to £100

The Financial Conduct Authority (FCA) has confirmed changes to its rules to allow for an increase in the single transaction contactless payment threshold from £45 to £100.

The contactless threshold for multiple transactions will also increase from £130 to £300.

The FCA saya that these changes will allow the industry to increase the limit for contactless payments at the point of sale to securely improve convenience for consumers and merchants. In future we could see more consumers using contactless card payments for higher value transactions such as purchasing fuel and weekly groceries without needing to use Chip and PIN.

Sheldon Mills, Executive Director, Consumers and Competition said “During the pandemic more people have been using contactless payments. We are changing our rules to help the industry continue to respond to the changing ways in which people prefer to pay.”

“Increasing the regulatory limits allows industry to raise the contactless limit in the future to meet the evolving expectations of customers and merchants for fast but secure ways to pay. When making any change, it is important that the industry continues to ensure the right protections are in place to keep payments safe and secure.”

“We encourage the industry to use these changes to support consumers and merchants during the recovery from the coronavirus pandemic.”

There has been an ongoing increase in the use of contactless payments in recent years. In response to this changing behaviour and the pandemic, the industry had already increased the contactless limit from £30 to £45 in April 2020.

To support consumers and merchants during the coronavirus pandemic, the FCA had confirmed that they were very unlikely to take enforcement action where a firm fails to require Chip and PIN when a customer exceeds the cumulative transaction value threshold.  As a result of the new changes, this flexibility is no longer needed. This means that firms will be required to comply with the new thresholds and that the FCA may take appropriate measures, including enforcement action, where breaches of the limits set in new rules are identified.

While the adoption of contactless payments increases, cash remains an important payment method for many, including vulnerable consumers and small businesses. It is part of the FCA’s Business Payments priority to make sure consumers can access the cash they need. The FCA does not believe this change will impact consumers’ ability to access cash.

Commenting. on the announcement UK Finance David Postings said “UK Finance welcomes the flexibility to increase the contactless limit to £100. This is a great move for customers and will allow them to use contactless to pay for higher value transactions like their weekly shop or filling up their car with fuel.’

“This could not have been achieved whilst still in the EU so is a true Brexit dividend. We will work closely with the payments sector and retailers ahead  of increasing the limit later this year.”

Sarah Pennells, Head of Financially capability at Royal London, said “This will be widely welcomed by those who routinely tap their card to pay, and is clearly in line with a gradual move away from cash payments. However, it does make card theft more attractive and could also encourage people to spend more – possibly more than they can afford. Some countries are developing innovative ways to deal with contactless fraud, and we should consider what might work well in the UK as well as looking at ways of helping consumers stay in control of their spending.”

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said “The single contactless limit for credit and debit cards will rise to £100, and cumulative contactless payments up to £300 (before the need for consumers to input their chip and pin. This change may cause a divide among consumers, some may celebrate the change whereas others could now be concerned about over-spending or fraud. It is wise for customers to keep a close eye on where their money goes and be aware of when they will be required to use their pin. Peace of mind is a definite benefit when using a credit card for shopping, either in store or online, as consumers are protected under Section 75 of the Consumer Credit Act for payments of £100 or more. If shoppers struggle to pay back their balance, they would be wise to hunt down a decent interest-free credit card for extra breathing space to tackle the debt.”