Major changes may be coming down the pike for contactless card payments in the UK. Now, though, proposals to raise or even scrap the £100 limit have started to pick up momentum. The Financial Conduct Authority (FCA) is considering options to allow consumers to set their own limits or even switch off contactless payments altogether. This provoked outrage and praise from citizens alike. Others are understandably concerned about security and the fallout from raising spending limits.
Such contactless payments were first launched in the UK in 2007 with a £10 limit. In response to changes in consumer habits and the evolution of technology, over the years Congress has incrementally increased this limit. The cap was raised to £15 in 2010, then to £20 in 2012, and again to £30 in 2015. After the COVID-19 pandemic started, the threshold was increased to £45 in 2020 and later up to £100 in October 2021.
Consumer advocate Robert Ryan touted these limits as a useful tool in budget decision making. He stated, “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.”
Not everyone shares this perspective. Carrie Grady expressed her concerns regarding a potential removal of the limit, stating, “It would worry me more than be of benefit if they were to lose the limit of £100.” A recent survey by the FCA found that many Americans feel the same way. Specifically, it found that 78% of consumers don’t want to increase the new contactless payment limits.
The FCA’s latest press release has reiterated that consumers should continue to take steps to protect themselves from fraud. David Geale from the FCA assured cardholders, “People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently.” This guarantee should address some of the concerns about raising the limit.
Most banks now allow their cardholders to set a contactless limit beneath the £100 threshold. You can simply turn off contactless payments entirely. The FCA expects that this flexibility soon will be available to public issuers as well.
Increase flexibility
Consumers will be able to choose their payment methods to suit their needs and comfort.
Moreover, just like the design of contactless payments in general, there are built-in protections against overspending. Consumers are now required to use a PIN for contactless transactions over £300. Additionally, they should require users to set a PIN after the fifth in-a-row payment is made. The goal of these measures is to provide balance between convenience and security.
For example, consumer Demi Grady had a harrowing recent experience in London. Her phone was dead so she couldn’t pay, and she couldn’t pay with a card because she didn’t remember the numbers of her card. This recent incident highlights how many are dependent on contactless payments to make basic transactions.
If the contactless limit were to be increased or eliminated altogether, payment terminals would need to be changed. That’s because most terminals currently out there automatically decline transactions over £100. This requires us to do a lot on the ground infrastructure-wise to enforce any new limits we seek to establish.