The FCA has announced plans to give banks and payment providers greater flexibility when setting future contactless payment limits, a move aimed at making everyday payments easier for consumers while supporting innovation and economic growth across the UK’s payments ecosystem.
Under the new approach, banks and payment providers with strong fraud controls in place will be allowed to set their own contactless limits, rather than adhering to a single fixed threshold. The regulator said this will enable firms to respond more effectively to changing consumer behaviour, inflationary pressures and advances in payment technology. Providers are also being encouraged to offer customers more control, including the ability to set their own contactless limits or turn contactless payments off altogether, features that are already available at many high street banks.
The announcement comes as contactless payments continue to dominate in-store transactions. Research cited by the FCA from Barclays found that almost 95% of all eligible in-store card transactions were contactless in 2024, underlining how embedded the technology has become in everyday spending. The regulator said its rules need to keep pace with how people choose to pay, while still maintaining high standards of consumer protection.
While the FCA is easing prescriptive rules around limits, it stressed that strong fraud prevention remains a non-negotiable requirement. Firms processing contactless payments must have robust controls in place, and the increased flexibility is expected to incentivise further investment in fraud detection and prevention. According to the regulator, this should ultimately result in greater protection and peace of mind for consumers as limits evolve.
Importantly, existing consumer protections will remain unchanged. Customers will continue to be reimbursed in cases of unauthorised fraud, such as when a card is lost or stolen, ensuring that increased flexibility does not come at the expense of safety.
FCA executive director of payments and digital finance David Geale said, “Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers.”
The proposals have been welcomed by the hospitality sector, where speed and convenience at the point of sale are critical. UKHospitality chair Kate Nicholls said, “Making life easier for consumers is a positive for any hospitality and high street business, and I’m pleased the FCA is bringing forward this change.” She added, “Contactless has increasingly become the preferred payment method of choice for many people and lifting the limit can mean quicker and easier experiences for consumers. While many people still prefer to use cash or chip and PIN, this change adds much-needed flexibility for providers and consumers.”
The new standards follow a public discussion and consultation on contactless payments and form part of a broader package of around 50 measures outlined by the FCA earlier this year to support economic growth and prioritise digital solutions. The rule changes are due to take effect in March 2026. After that point, it will be up to individual firms to decide if and when they adopt higher or more flexible contactless limits, provided they clearly communicate any changes to customers.
Keep up with all the latest RegTech news here
Copyright © 2025 RegTech Analyst
Copyright © 2018 RegTech Analyst
