Emma RadmoreThe FCA is asking for views on whether it would be a good thing to remove the contactless limit, and has published an “engagement paper” to seek views. The suggestion is all part of the work to support growth. The FCA asks whether removing the limit would give better choice, flexibility and smoother purchases, but does not want this to the at the cost of consumer protection. It suggests that making regulation less prescriptive would give firms greater control and could help to promote innovative payment methods or fraud prevention.
The current limit is £100 (set in 2021) for any single transaction, and then a cumulative total of £300 or 5 transactions – and after this the current SCA requirements mean the customer needs to put in their PIN. Already, however, this does not happen when customers use digital wallets as they include SCA when used. Also, both merchants and sometimes consumers, if their PSP lets them, can change these limits. The FCA argues that people not having to put in their PIN will lead to shorter queues and therefore happier merchants and customers.
Research has shown that contactless card fraud is a very small part of overall payments fraud and a relatively small part of unauthorised payment fraud. Internationally, however, most major jurisdictions do apply limits, although in the US and Singapore these are industry-set.
The FCA will carry out significant work on payments in the coming years, but is considering accelerating removal of the contactless limit.
For the time being, it sees three options for change:
- introducing a new risk-based exemption for in-person transactions – this is the FCA’s preferred option;
- amending the current limits; or
- making legislative change and relying on the Consumer Duty.
The FCA asks for comments by 9 May.