Regulator explores easing or potentially removing UK contactless payment limits to support growth

The UK’s Financial Conduct Authority is assessing whether removing or raising the current contactless payment limit could benefit consumers, merchants and wider economic growth, as part of a broader push to make financial regulation less prescriptive.

In an engagement paper, the regulator said greater flexibility on contactless limits could deliver smoother transactions for households and businesses, while giving payment firms more control over how limits are set and managed. The work follows a commitment set out in a January letter to the Prime Minister outlining steps the FCA would take to support growth.

One proposal under consideration would allow firms with strong fraud controls to set their own contactless limits, similar to arrangements already in place in the United States. The FCA said this approach could encourage innovation in payments technology and fraud prevention, provided firms can demonstrate effective safeguards.

Any changes would need to comply with the Consumer Duty, which requires firms to deliver good outcomes for customers. The regulator stressed that it would closely examine how consumers are protected if limits are increased or removed.

Regulator seeks feedback on allowing firms greater flexibility over contactless limits while maintaining consumer protections

Existing legal requirements for firms to reimburse customers for unauthorised payment fraud, such as where cards are lost or stolen, would remain unchanged under any new framework, the FCA said.

The regulator is seeking feedback from industry and other stakeholders, with responses to the engagement paper due by Friday 9 May 2025.

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David Geale, executive director of payments and digital assets at the FCA, said: “Currently 85% of people in the UK make contactless card payments each month. This is the perfect opportunity to explore whether we can improve and increase trust in the UK’s payments system.

“We’ve worked fast to progress this work which is one of around 50 measures we put forward at the start of the year to help support economic growth across the UK and, in turn, improve lives.'

Economic Secretary to the Treasury, Emma Reynolds, said: “Every regulator has a part to play in the collective mission to drive growth through our Plan for Change, which puts more money into working people’s pockets.

“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.”