The UK’s financial regulator is preparing to give banks and payment providers greater freedom to set their own contactless payment limits, in a move designed to reflect changing consumer behaviour and advances in payment technology.
Under the new approach, firms with strong fraud controls in place will no longer be bound by a single industry-wide cap. Instead, they will be able to determine appropriate limits for contactless transactions, allowing them to respond more effectively to inflation, shifting spending habits and new innovations in payments. The Financial Conduct Authority (FCA) has also encouraged providers to give customers more control, including the ability to set their own limits or disable contactless payments entirely, options that are already offered by many high street banks.
The changes come as contactless cements its position as the dominant way people pay in shops. Research by BarclaysLink found that almost 95% of all eligible in-store card transactions were made using contactless payments in 2024, highlighting how quickly tap-to-pay has become the default for everyday spending.
While the rules will give firms more flexibility, the FCA has stressed that robust fraud prevention remains essential. Banks and payment providers will still be required to have strong controls in place when processing contactless transactions, with the regulator arguing that greater flexibility should act as an incentive for firms to further strengthen their fraud defences. This, it says, should ultimately lead to better protection and greater peace of mind for consumers.
Crucially, existing consumer safeguards will not change. Customers will continue to be reimbursed in cases of unauthorised fraud, including situations where a card has been lost or stolen, ensuring that higher or variable contactless limits do not weaken consumer protection.
Explaining the rationale behind the move, David Geale, executive director of payments and digital finance at the FCA, 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 hospitality sector has welcomed the announcement, arguing that fewer restrictions could improve the customer experience on the high street. Kate Nicholls, chair of UKHospitality, 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.
“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 updated standards follow a public discussion and consultation on contactless payments and form part of a broader push by the regulator to support economic growth and prioritise digital solutions. The FCA previously outlined around 50 such measures in a letter to the Prime Minister in January.
The rule changes are set to take effect in March 2026. From that point, it will be up to individual firms to decide if and when they adopt new contactless limits, with any changes needing to be clearly communicated to customers.
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