FCA considers lifting contactless payment limit to boost consumer spending

The regulator has indicated that the removal of this cap could greatly enhance the shopping experience for consumers. In a letter sent to the Government, the FCA expressed that eliminating the contactless payment limit would offer both firms and consumers increased flexibility and help to align payment practices within the UK more closely with those seen in the United States, where no fixed limit exists.

The introduction of contactless payments in 2007 saw an initial limit of £10, which has been incrementally raised over the years to its current state. Notably, in 2021, the cap was raised to £100. 

This change occurred against a backdrop of increasing consumer reliance on contactless transactions, as evidenced by a recent study conducted in October by UK Finance. The study highlighted that contactless payments represented approximately 65% of all credit card and 77% of all debit card transactions, with 1.6 billion such transactions taking place in that month alone.

A spokesperson from UK Finance remarked, “We are continuing to speak to the FCA to understand their thinking and plans. We understand they are looking at whether industry can have greater involvement and flexibility in the limit in the future.”

This indicates an ongoing dialogue between the FCA and financial institutions regarding potential changes to the payments landscape.

In addition to the possible lifting of the contactless payment limit, the FCA is reportedly considering other measures to facilitate economic progress. These include relaxing mortgage regulations to aid first-time buyers in entering the property market and implementing requirements for insurance firms to accept electronic verification of death to expedite bereavement claims.

This is just one of a number of topics discussed at this year’s Credit Week, to find out more and book you’re tickets click here.