The Financial Conduct Authority (FCA) has announced plans to offer banks and payment providers greater flexibility in determining contactless payment limits.

Adapting to Consumer Behavior

This new approach is designed to align with changing consumer habits and promote the advancement of payment technology. The FCA’s standards emerged following a public consultation on contactless payments, as part of its broader strategy for fostering economic growth and emphasizing digital solutions.

To reduce administrative burdens, the regulator suggests that institutions with robust fraud prevention mechanisms could independently establish their own limits for contactless transactions. This measure aims to allow these organizations to more promptly cater to customer needs, address inflationary pressures, and keep up with emerging technologies.

With a significant surge in the adoption of contactless payment methods, Barclays data indicates that nearly 95% of all eligible shop purchases were made using contactless cards in 2024. This underscores the growing reliance on tap-to-pay transactions as a standard for everyday spending.

Fraud Prevention Remains Paramount

Despite this increased flexibility, the FCA emphasizes that financial services providers must maintain stringent fraud control measures to protect transaction security. The regulator stresses that these enhanced capabilities should motivate companies to improve their fraud prevention systems.

For customers, protection standards remain unchanged. In cases of unauthorized transactions or lost/stolen cards, individuals will still be reimbursed by the FCA to safeguard against potential financial harm due to higher or variable limits on contactless payments.

The revised guidelines will come into effect in March 2026, at which time firms must evaluate and implement new limits if they choose to do so. The FCA requires all changes to be communicated clearly to customers by relevant organizations.