A major shift in how Britons pay for goods is set for March, as the fixed national limit on contactless card payments is abolished. From 19 March 2025, individual banks and card providers will be given the power to set their own transaction restrictions, a move that has sparked both optimism from businesses and serious warnings about a potential surge in fraud.
The End of the £100 Limit
The Financial Conduct Authority (FCA), the UK's financial watchdog, confirmed the change, stating it will allow the industry to better adapt to changing consumer demands, inflation, and new technology. The blanket £100 contactless limit, first introduced in 2021, will be removed. The FCA has suggested that providers could raise single transaction limits to £150 and cumulative limits (the amount you can spend before being asked for a PIN) to £450.
David Geale, the FCA's Executive Director of Payments and Digital Finance, said: "Contactless is people’s favoured way to pay. We want to make sure our rules provide flexibility for the future, and choice for both firms and consumers."
Convenience vs. Security: A Divided Response
The hospitality sector has welcomed the announcement. Kate Nicholls, Chair of UKHospitality, called it "a positive" for high street businesses, noting that it could lead to quicker and easier transactions for customers who increasingly prefer tap-and-go payments.
However, economists and security experts have raised red flags. The FCA's own analysis presents a stark worst-case scenario: if limits are raised as suggested, contactless fraud could increase by 131% over the next three years. This is despite current fraud rates being relatively low, with UK Finance data showing just 1.2p lost for every £100 spent via contactless.
Richard Whittle, an economist at the University of Salford, warned that the ease of payment could have a downside for consumer finances. "If this ease of payment leads to consumers spending without thinking, they may be more likely to buy what they don’t really want or need," he stated. "This could be a particular issue with credit cards, when people are spending borrowed money and accumulating debt."
What It Means for Households
The key change for UK households is that limits will no longer be uniform. Consumers will need to check with their own bank to understand their new personal contactless thresholds. While this offers potential for higher, more convenient spending limits for big grocery shops or fuel fills, it also demands greater personal vigilance.
The onus will now be on individual banks to balance customer convenience with robust security measures to prevent the significant rise in fraud that regulators have cautioned against. Consumers are advised to:
- Monitor bank statements regularly for unfamiliar contactless transactions.
- Set up transaction alerts with their bank if available.
- Be aware that their contactless limit may differ from friends or family using other banks.
The coming months will reveal whether the industry's new-found flexibility leads to a smoother payment landscape or becomes a gift to opportunistic criminals.
