Millions of cardholders could soon have the option to set their own contactless payment limits or choose no limit for their transactions, as confirmed by a regulator. Starting in March, banks and card providers can establish maximum or unlimited single payment amounts without requiring a four-digit PIN. However, the Financial Conduct Authority (FCA) is urging financial institutions to permit customers to customize their payment boundaries or disable the contactless feature entirely. Some banks already offer these functionalities.
This announcement comes despite an FCA survey revealing minimal interest among consumers and industry participants in altering the existing £100 contactless card transaction limit.
The FCA clarified that while card providers have the flexibility to change the £100 limit starting in March, immediate alterations are not anticipated. Since their introduction in 2007 with a £10 limit, contactless card transaction caps have gradually increased, eventually reaching the current £100 limit in October 2021 due to the Covid pandemic.
Although the £100 limit applies to physical cards, smartphone users can make unlimited purchases without a PIN due to enhanced security measures like thumbprints and facial identification. There are concerns about the elevated risk of theft and fraud with cards, especially concerning high-value transactions. However, protections such as mandatory PIN entry after several consecutive contactless payments already exist, and consumers would still be reimbursed if subjected to fraud, according to David Geale, FCA's executive director of payments and digital finance.
'Contactless is people's favored way to pay,' Geale remarked on the BBC's Today programme. Despite the efficiency of the system, rigid limits can sometimes hinder transactions, which is why greater flexibility is being advocated to tailor contactless payments to individual risk assessments.
Countries like Canada, Australia, and New Zealand already permit industry-specific contactless card limits. Jana Mackintosh, managing director of payments and innovation at UK Finance, emphasizes that any future changes will uphold robust security and anti-fraud measures.
The FCA survey found that 78% of respondents were against changing current contactless limits. There's a risk that the convenience of unlimited payments could lead to unintentional overspending, particularly with credit cards, accumulating debt from borrowed money.
Financial abuse charities warn of potential drawbacks, such as giving abusers unchecked access to victims' funds, and pushing further towards a cashless society may exacerbate these issues for victims who rely on cash to evade digital monitoring. To alleviate access to cash amid bank closures, shared banking hubs are being developed. Recently, Cash Access UK opened its 200th banking hub in Billericay, Essex.