Major change to contactless payments could be introduced for all UK shoppers

The contactless card payment limit could be increased or scrapped entirely under proposals being looked at by the financial watchdog.

The contactless limit is currently set at £100 - for anything above this, shoppers normally need to enter their four-digit PIN. But the Financial Conduct Authority (FCA) is considering raising this limit, or getting rid of it altogether.

In a new update this week, the regulator said it wants to "give card providers the flexibility to decide the right limit" for customers. This is a similar system to what is used in the United States, where banks and card providers can set their own contactless limits.

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The FCA proposals, which were first announced in a letter to the Prime Minister back in January, will be consulted on until October 15, 2025.

David Geale, executive director of payments and digital finance at the FCA, said: “We‘re seeing smarter payment technology and more well-established fraud controls, so it’s the right time to let firms tailor contactless payments to fit their customers’ needs and drive innovation.

“While we wouldn’t expect to see immediate changes to limits by firms, they would have the flexibility to make payments more convenient for customers. People are still protected; even with contactless, firms will refund your money if your card is used fraudulently.”

Many card providers already allow customers to adjust their personal contactless limit, or turn off the function altogether. The FCA said it is encouraging firms to continue to offer their customers this choice.

Under the current rules, you can normally make multiple contactless payments under £100 in a single day - however, you may be asked to enter your PIN if the purchases add up to over £300.

The FCA estimates 85% of people in the UK make contactless card payments each month. The contactless limit was set at just £10 when it was introduced in 2007, before rising to £15 in 2010, then £20 in 2012, to £30 in 2015, then to £45 in 2020 and £100 in 2021.

UK Finance data shows around around 1.3p per £100 spent on contactless transactions is fraudulent, compared with 6p per £100 for all unauthorised fraud.

Banks and payment firms must reimburse unauthorised contactless payments where fraud has taken place cases, such as when a card has been lost or stolen.

In a statement issued earlier this year, Economic Secretary to the Treasury, Emma Reynolds, said: "The FCA's review of the contactless payment limits, including removing the £100 limit on individual payments, is a welcome step to ensure that families can safely benefit from more flexibility when making purchases."