City regulator considering scrapping £100 contactless limit
The Financial Conduct Authority (FCA) announced on Friday it was looking for opinions on scrapping the contactless card limit and whether changes could benefit the UK economy.
The current cap prohibits customers from making contactless card payments of more than £100 – however, the rule is set for review in a bid to boost growth.
This follows the FCA’s letter to Prime Minister Keir Starmer in January, where the regulator outlined plans to remove ‘unnecessary regulation’ to aid the Government’s economic ambitions.
85 per cent of people in the UK make contactless card payments each month, according to the FCA.
The regulator said: “Families and businesses across the country could benefit from greater choice, flexibility and smoother purchases”.
It stressed any changes made must meet Consumer Duty guidelines that the regulator uses to foster positive outcomes.
Changes could be a ‘win-win’ for consumers and economy
Founder of UK fintech firm Pockit and Monese chief executive, Virraj Jatania, welcomed a “responsible increase in the upper limit” and added it could be a “win-win for both consumers and the wider UK economy.”
However, Jatania told CityAM the positives come “with an important caveat”.
“We need to ensure that we double down on robust anti-fraud controls, which are vitally important for protecting the most financially vulnerable.
“While the vast majority of fraud now happens online, typically originating on social media platforms, theft and impersonation in the real world remain a serious threat,” Jatania added.
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.”
The FCA said it would be accepting feedback on the matter until Friday May 9.
Further regulatory reforms would follow the abolition of the Payment System Regulator (PSR) announced on Tuesday.
The Prime Minister and Chancellor Rachel Reeves announced the PSR would be folded into the FCA in their first flagship change to regulation aiming to drive efficiency.