The Financial Conduct Authority (FCA) has announced plans to scrap the current £100 ceiling on contactless card transactions in the United Kingdom. If adopted, the measure would allow banks and card issuers to set their own thresholds for contactless payments, potentially opening the way for customers to make higher-value purchases without entering a PIN or using chip-and-pin verification.
Proposal to Eliminate £100 Contactless Cap
The FCA argued that the current framework, introduced to limit exposure to fraud, no longer reflects today’s digital payment environment. By shifting responsibility to individual firms, the regulator hopes to encourage greater flexibility and consumer choice while maintaining safeguards. According to the FCA, the proposal is part of a broader push to align regulations with modern payment behaviors and to support the government’s wider digital economy agenda.
Contactless payments have grown rapidly in the UK since the pandemic, with the £100 cap introduced in 2021 as a temporary measure to boost cashless transactions during lockdowns. Figures from UK Finance show that nearly 70% of card transactions under £100 are now contactless, underscoring their role in daily spending habits.
Consultation Period and Broader Economic Context
The FCA has opened a consultation period running until October 15, 2025, inviting responses from consumers, industry stakeholders, and businesses. Officials stressed that public engagement is central to evaluating the potential impact of removing the universal limit.
The regulator’s initiative is just one element of a wider reform package. Earlier this year, the FCA outlined around 50 measures in a letter to the Prime Minister aimed at fostering economic growth and modernizing financial services. These proposals range from reviewing investment rules to ensuring more flexible payment infrastructures.
The decision comes amid broader debates over the UK’s future as a leading hub for fintech and digital payments. Policymakers see the shift to contactless as an essential component of maintaining competitiveness, particularly as rival financial centers in Europe and North America expand their own digital frameworks.
Customer Protections and Current Practices
The FCA emphasized that customer protection will remain at the heart of the system, regardless of whether a cap is retained. Executive Director of Payments and Digital Finance David Geale stated that cardholders would continue to be safeguarded against unauthorized transactions. “Consumers are protected and firms are expected to refund victims of fraud,” Geale said, underlining that expanded limits would not come at the expense of trust.
Many financial institutions already provide flexibility in how contactless cards are used. Customers can lower their personal limits, disable contactless functions entirely, or require PIN authentication for all transactions. The FCA indicated that such customization tools would remain vital in managing risk and giving consumers control over their finances.
Industry groups have echoed these assurances, noting that enhanced fraud detection technologies, such as real-time monitoring systems and AI-driven security checks, are already being deployed. These systems aim to flag unusual spending patterns quickly, limiting exposure to fraud even in the absence of a uniform cap.
Implications for Payments Landscape
If implemented, the removal of the nationwide £100 ceiling could reshape the payments landscape in several ways. Banks and card issuers would gain discretion in determining limits, potentially tailoring them to different customer segments. For example, premium customers might be offered higher caps, while standard users could retain more conservative thresholds.
The move is expected to stimulate innovation in retail payment services. Merchants may benefit from faster checkout times for higher-value transactions, while consumers could enjoy greater convenience when making purchases such as grocery bills, household goods, or transport fares. However, the FCA acknowledged that uptake is likely to vary across providers, with many firms expected to maintain current limits until consumer confidence in fraud prevention is firmly established.
Market analysts also point to the potential for reduced reliance on cash transactions, particularly in sectors where higher-value purchases are common. This shift could accelerate the UK’s transition toward a more cashless economy, though regulators have also committed to ensuring access to cash remains available for those who rely on it.
Ultimately, the FCA’s consultation reflects a balancing act between convenience and security. By allowing firms to choose their own contactless policies, the regulator aims to create a payments ecosystem that is both flexible and resilient, ensuring the UK keeps pace with evolving consumer expectations and technological advancements.