Millions of UK banking customers are set for a significant shift in how they pay for goods and services from next year, as the long-standing cap on contactless transactions is officially being removed.
The End of the £100 Contactless Cap
The Financial Conduct Authority (FCA) has confirmed that the £100 contactless payment limit will be scrapped from March 2025. This regulatory change will impact every shopper and account holder in the country, including customers of major high street banks such as Lloyds, Nationwide, and NatWest.
Under the new rules, individual banks and card issuers will be granted the power to set their own transaction limits for tap-and-go payments. This could theoretically allow for unlimited spending via contactless methods in shops, although individual customers may also be given tools to set personal limits on their own cards for added security.
Convenience Versus Security Concerns
Industry analysis indicates that consumers rarely make single contactless purchases over the current £100 threshold. However, the change is designed to offer greater flexibility and reflect the growing popularity of this payment method. David Geale, the FCA's Executive Director of Payments and Digital Finance, noted that "Contactless is people's favoured way to pay."
Financial experts have welcomed the convenience but urge caution. Nicola Morgan, a financial services expert at confused.com, stated: "For many, contactless has become the simplest way to pay, and giving banks and customers more flexibility to set their own limits could make everyday purchases quicker and more convenient."
She added a crucial warning: "But it’s important to balance convenience with security. Contactless payments don’t require a PIN, which means they’re easy to use, but that also means it’s vital to manage your own settings carefully." The move inevitably raises heightened concerns about the potential for increased fraud if cards are lost or stolen.
What Happens Next for Shoppers?
While the regulatory change takes effect in March, the practical impact will depend on decisions made by each bank. It remains to be seen what limits, if any, institutions like Lloyds, Halifax, Barclays, and others will impose. Customers are advised to:
- Stay informed about communications from their own bank regarding new limits.
- Review and utilise any new in-app controls for setting personal transaction caps.
- Remain vigilant, reporting lost or stolen cards immediately to minimise fraud risk.
This pivotal shift marks the next evolution in the UK's payment landscape, prioritising speed and convenience while placing greater onus on both banks and consumers to manage security proactively.
