Contactless card payments are currently limited at £100 (Image: GETTY)
A proposed change by the Financial Conduct Authority (FCA) could completely change your shopping experience. Under the new proposal, the current £100 cap on contactless payments could be removed.
This limit had previously been increased from £45 in 2021, sparking concerns over consumer protection and vulnerability to fraud. The regulator, however, has promised that robust measures would still be in place to secure funds against criminal activities even if cards are misplaced.
Eliminating the threshold would mean that Britons could make purchases through contactless payments regardless of the amount, bypassing the need to enter their PIN number.
Currently, banks have the discretion to impose their own spending limits or decide how frequently a card can be tapped before requiring PIN verification or another form of authentication.
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While the removal of the limit could streamline transactions for many in the UK, it also raises potential security issues. For instance, if a card were to be stolen, there would be no cap on the sum thieves might charge without needing the cardholder’s PIN.
Despite these potential risks, the Engagement Paper detailing the proposal appears to dismiss such worries, stating: “Such fraud is a very small part of total unauthorised fraud and technologies within firms to identify and stop fraudulent payments are sophisticated and improving.
“Methods and trends in payments fraud are constantly evolving, as are fraud-detecting technologies…We want to understand whether the existing contactless payment limits are still relevant and achieving the best overall outcomes.”
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The FCA is considering a number of approaches, such as giving control over limits to businesses a model currently in play in the USA.
This approach would conditionally allow businesses to adjust the preset limits, provided they could demonstrate “low rates of fraud” alongside robust mechanisms for detecting and addressing fraud. This might lead to a more secure environment for consumers in the marketplace.
Other considerations by the FCA involve increasing the contactless limit or merely adjusting the limitation for individual transactions. By streamlining the payment experience through raised contactless capabilities, the FCA aspires to enhance family and consumer confidence and “build trust in the UK payments system”.
The potential benefits for businesses include reduced queuing times, faster transactions, and a smoother checkout experience that may result in increased customer satisfaction.
Emma Reynolds, the Economic Secretary to the Treasury, expressed support for the initiative: “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 regulator has given assurances that any alterations will prioritise “how customers are protected. It also highlighted: ” It also emphasised: “Existing legislation requiring firms to reimburse consumers in cases of unauthorised payment fraud, for example when their cards are lost or stolen, will remain in place.”