The UK’s financial regulator has scrapped the £100 cap on contactless card payments, handing banks the power to set their own limits as of 19 March.

The Financial Conduct Authority (FCA), which announced the rule change last year, said the change would allow lenders to respond more flexibly to inflation, consumer behaviour and advances in payment technology. The move removes both the single transaction cap and the cumulative spending thresholds that previously required cardholders to enter a PIN after £300 or five taps.

Under the previous regime, introduced in October 2021, contactless payments were limited to £100 per transaction, with built-in safeguards to trigger verification checks. Digital wallets such as Apple Pay were already exempt from these limits, reflecting their additional security features.

The FCA indicated that most banks are unlikely to raise limits in the near term, noting that customers are broadly comfortable with existing thresholds. Major high street lenders including Nationwide, NatWest, HSBC, Barclays, Lloyds and Santander have confirmed they will maintain the £100 cap for now, alongside digital challengers such as Starling, Monzo and Revolut.

Data from UK Finance shows that contactless fraud remains relatively low, at 1.2p for every £100 spent. However, the FCA has modelled that if limits were increased to £150 per transaction and £450 cumulatively, fraud losses could rise by as much as 131 per cent over three years in a worst-case scenario.

The regulator said it expects firms to implement robust safeguards before increasing limits, including real-time monitoring, transaction alerts and the ability to block suspicious activity. Banks will also be required to give customers the option to set their own contactless limits or disable the feature entirely.

Consumer protections remain unchanged, with cardholders entitled to refunds for unauthorised transactions provided they report losses promptly. Customers may be liable for up to £35 if they fail to notify their bank without delay, but all other fraudulent payments must be reimbursed unless the bank can prove negligence or complicity.

UK Finance figures show the average contactless transaction is just under £18, suggesting most spending falls well below existing limits. The industry body has also emphasised that contactless payments include multiple security layers, including periodic PIN checks and transaction traceability.

The policy shift marks a significant deregulation of everyday payments, though its practical impact will depend on how individual banks choose to balance convenience against fraud risk.

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