The UK Financial Conduct Authority (FCA) has announced it will lift the contactless payments limit starting in March.
In a statement posted today, the FCA said this will remove red tape and provide greater flexibility. Payments providers, including banks, with strong fraud controls, will be able to set their own cap on contactless payments. They are also encouraged to let customers set their own limit or to turn off contactless payments entirely.
Notably, payment providers must reimburse consumers in cases of unauthorised fraud.
Jonathan Frost, Director of Global Advisory for EMEA at BioCatch, commented on the increase from the £100 current contactless limit.
“When considering the FCA’s lifting of contactless limits, it’s important to assess its potential indirect effects. The direct impact is clear, giving consumers greater convenience while maintaining fraud protection. However, FCA estimates indicate the change could cause up to £31.3 million per year in additional contactless fraud, representing a 131% increase,” stated Frost. “The core question is whether raised limits will trigger long-term impacts, such as shifts in criminal behaviour. In Spain, higher-value contactless transactions require a PIN to combat fraud.”
Frost added that some retailers remain hesitant to accept contactless payments due to abuse and the risk of chargeback
“Given these dynamics, banks should prioritise the implementation and continuous improvement of real-time fraud detection systems that focus on customer behaviour. This will help stop fraud by considering all customer behaviour rather than just focusing on card use.”