Contactless Card Payments to Abandon Transaction Limits in Major Overhaul

Contactless Card Payments Could Become Unlimited Under New Plans The Financial Conduct Authority (FCA) has proposed a significant change to the contactless card payment limit, which could see transactions exceeding £100 become unlimited. This move would bring cards in line with digital wallets on smartphones, which have no restriction on transaction values. Currently, contactless card payments are capped at £100, introduced in October 2021 as part of a gradual increase from £45. The FCA's proposal aims to remove this limit, allowing banks and other providers to set their own limits. If approved, the change could be implemented early next year. Market Context Contactless card payments have become increasingly popular since their introduction in 2007, with transaction values rising steadily over the years. The current £100 limit was introduced as part of a broader effort to increase consumer spending and support businesses affected by the COVID-19 pandemic. The FCA's proposal reflects the growing trend towards digital payments and the increasing use of contactless technology. According to recent data, contactless transactions account for over 30% of all card payments in the UK, with this number expected to continue rising. Business Implications If implemented, the removal of the £100 limit could have significant implications for businesses and consumers alike. On one hand, it would provide greater flexibility and convenience for customers, allowing them to make larger purchases without needing to enter a PIN. This could lead to increased sales and revenue for merchants, particularly in sectors such as retail and hospitality. On the other hand, some experts have raised concerns about potential security risks associated with higher-value contactless transactions. The FCA has stated that card providers would only permit higher-value contactless payments if they meet strict security standards, including enhanced authentication measures. Stakeholder Perspectives The proposal has been met with mixed reactions from industry stakeholders. Some banks and payment providers have welcomed the move, citing its potential to increase consumer spending and support economic growth. Others have expressed concerns about the potential risks associated with higher-value contactless transactions. "We believe that removing the £100 limit would provide greater flexibility for our customers and help to drive economic growth," said a spokesperson for one major bank. "However, we also recognize the need for robust security measures to protect against potential risks." Future Outlook The FCA's proposal is subject to consultation and approval from the UK government. If implemented, the removal of the £100 limit could have significant implications for businesses and consumers alike. As the payments landscape continues to evolve, it will be interesting to see how this change affects consumer behavior and merchant acceptance. In conclusion, the proposed removal of the £100 contactless card payment limit has the potential to revolutionize the way we pay for goods and services. While there are valid concerns about security risks, the benefits of increased flexibility and convenience for consumers could outweigh these concerns. As the payments industry continues to evolve, one thing is clear: the future of contactless payments is looking increasingly limitless. *Financial data compiled from Bbc reporting.*