The City regulator said the change would improve convenience and allow banks and credit card providers to set their own spending limits. However, consumer experts have warned that the move could increase the risk of fraud and card theft.
Contactless payment limits have steadily increased since the technology was introduced in 2007, when transactions were capped at £10. The limit rose to £30 in 2015, increased again to £45 in 2020 and reached £100 in 2021. Under the new rules, banks will be free to decide whether to keep a cap in place or remove it entirely.
Contactless payments now account for a significant share of everyday spending. Around 39 per cent of all payments were made using contactless cards last year, according to UK Finance, the banking industry body. This compares with 21 per cent in 2019 and just 3 per cent in 2015.
The use of cash continues to decline, accounting for 9 per cent of payments last year, down from 23 per cent in 2019.
Smartphone based contactless payments have also surged in popularity. Services such as Apple Pay and Google Pay were used by 57 per cent of adults last year, up from 42 per cent in 2023. These payments are not subject to a spending limit because they require additional security such as a passcode, fingerprint or facial recognition.
Warnings over fraud risk
The FCA first proposed removing the contactless limit earlier this year as part of efforts to align the UK with countries including Canada, Singapore and the United States, where banks already set their own limits.
However, the regulator’s own research suggests the public is not convinced. In a survey of 1,256 people, 78 per cent said the £100 limit should remain in place.
Andrew Hagger, founder of the personal finance website MoneyComms, said consumers were unlikely to welcome the change. He argued that the existing limit causes little inconvenience and is not worth sacrificing for added risk. Removing it, he said, would simply make stolen cards more attractive to criminals.
Security measures will still apply alongside the removal of the single transaction cap. Cardholders are currently required to enter their PIN after spending £300 through contactless payments or after making five consecutive transactions, a safeguard designed to limit losses if a card is stolen.
Despite these protections, card fraud continues to rise. UK Finance said £52 million was lost to stolen card fraud in the first half of this year, up from around £41 million in the same period in 2020.
The FCA said only banks and payment firms with robust fraud prevention systems would be permitted to set their own limits. It also said it would encourage firms to allow customers to choose their own maximum spend.
Jana Mackintosh, managing director for payments and innovation at UK Finance, said any changes would be introduced carefully and would retain strong security controls.
David Geale, executive director for payments and digital assets at the FCA, said contactless payments had become the preferred way for many people to pay. He added that the regulator wanted its rules to offer flexibility for the future while giving both consumers and firms greater choice.
