The regulator has drafted proposals that it said could see consumers and businesses across the country benefit from greater choice, flexibility and smoother purchases.
The FCA said making regulation less prescriptive would also give financial firms greater control and could promote innovative payment methods or fraud prevention solutions.
One option put forward by the FCA is to allow banks and card companies – which use technology to reinforce strong fraud controls – to set their own limits, as happens in the US.
But the regulator noted that any changes would need to support good customer outcomes, as required by the Consumer Duty rules.
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.
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“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.”
‘A welcome step’
Emma Reynolds, Economic Secretary to the Treasury, 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.”
The FCA will focus on how consumers are protected in the case of any changes to contactless limits. Existing legislation requiring firms to reimburse consumers in cases of unauthorised payment fraud – for example, when their cards are lost or stolen – will remain in place.
The FCA said contactless payment fraud, which is when a contactless card is lost or stolen and then used to pay for goods and services at a contactless terminal, remains a very small part of overall payment fraud.
According to UK Finance figures, fraudulent contactless spend totalled £41.5m in 2023, an increase of 19% on 2022. But the trade body noted that contactless fraud has been increasing at a much slower pace than the expansion in transaction volumes and values, and the fraud-to-turnover ratio for contactless fraud remains below that for unauthorised card fraud overall.
