Back in March 2025, the FCA published an engagement paper about contactless payments. It set out several ways in which the FCA could approach contactless payment limits in the future, to give greater flexibility to PSPs, consumers and businesses to decide limits which work for them, while still reducing the risks of fraud. The FCA says it received a lot of feedback and has now launched a formal consultation.
In summary, the FCA wants to remove regulatory contactless limits and instead allow banks and other payment service providers to deliver contactless payments if they identify that a transaction poses a low level of risk.
Currently, the FCA sets regulatory limits on the value and number of contactless payments that can be made before requiring authentication, typically via a personal identification number (PIN) entry. These requirements are set out in an exemption to the Strong Customer Authentication (SCA) requirements in the Payment Services Regulations 2017 (PSRs), within the Strong Customer Authentication Regulatory Technical Standards (SCA-RTS).
The existing contactless payments exemption sets separate limits on contactless payments:
- £100 for any single contactless transaction; and
- a cumulative total of £300 in contactless transactions or no more than five consecutive contactless transactions since the customer last used their PIN or other means of SCA.
It proposes to replace these regulatory limits with a new exemption, which would allow PSPs to process contactless payments without asking the payer to authenticate the payment, where PSPs identify the risk of a transaction to be low. It is important to note that under the proposed approach, and subject to compliance with all requirements under the rule, PSPs will be able to set their own contactless limits, including at current levels. The FCA says that it will continue to monitor and supervise firms to ensure they are achieving good outcomes, such as low levels of fraud, under the new exemption.
The FCA believes that this better balances the requirements on the FCA to "ensure an appropriate level of security for payment service users and payment service providers", while allowing "for the development of user-friendly, accessible and innovative means of payment", such as contactless payments.
The FCA noted that a significant number of members of the public wrote in to support keeping the contactless limits at their current level, particularly expressing concerns around the potential impact on fraud. But it says that its approach is designed to allow PSPs to take a risk-based approach to contactless payments, while also giving them greater flexibility to manage that risk, including though the ability to set their own contactless limits.
The FCA recognises that consumers have a wide range of financial objectives and needs. PSPs are already required to act to deliver good outcomes for their retail customers under the Consumer Duty. It recognises that many PSPs already enable their customers to set lower contactless limits or remove the contactless functionality entirely at their discretion, and that this could help deliver good outcomes for some consumers.
The FCA proposes adapting its guidance to PSPs to cover:
- How PSPs may identify the level of transaction risk when using this exemption.
- How PSPs may manage risk, including by still setting contactless limits.
- How PSPs may comply with their Consumer Duty obligations. Allowing consumers to set their own individual personal limits is one way PSPs could deliver good outcomes under the Consumer Duty. PSPs should also consider the needs of different customers, particularly customers with characteristics of vulnerability.
- How PSPs may work to reduce their fraud rates, including by referring to industry intelligence and benchmarking performance.
The consultation ends on 15 October 2025.
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