Tapping into new contactless limits

In March, we wrote about the proposal to further increase contactless limits. The FCA and HM Treasury had held a public consultation alongside discussions with the banking and retail sectors.

Now, they have approved the increases. From 15 October 2021, the contactless limit in the UK will increase to £100 for single transactions and £300 for multiple transactions. This follows a successful increase in April 2020 from £30 to £45 for single transactions, and it illustrates the FCA’s willingness to make changes to help drive economic growth as we move away from the EU and lockdown restrictions.

How are changes to contactless limits changed?

The changes will be implemented by the FCA. It will amend the regulatory technical standards on strong customer authentication (SCA) and common and secure methods of communication (SCA-RTS) (Article 11).

Currently, people can make single contactless card payments of up to £45 until they either reach the total contactless transaction threshold of £130 or make five contactless payments in a row. At this point, consumers must meet the SCA two-factor authentication standard by paying via chip and PIN.

The amendments of the SCA-RTS increase the thresholds to £100 and £300, respectively. People using their cards to purchase goods or services over the value of £100 can do so using chip and PIN, or may opt to use cash or other payment methods. What many people do not realise is that the contactless limits don’t apply to Apple Pay or Google Pay. These use biometric authentication technologies (such as fingerprints or face recognition), which mean they can process electronic transactions with no upper limit.

Do people welcome the changes to contactless limits?

While the changes are largely being celebrated, there are undoubtedly questions surrounding the prevention of fraud with limits increasing to over double the current amount. The onus will be on the payments industry to navigate consumer fraud issues and ensure the right protections are in place to keep payments safe and secure. To reinforce the right behaviours, the FCA has also indicated that its position on enforcing the limits will no longer be as flexible as it had been.

Will businesses need to take steps to prepare for the changes?

Payment terminals may need updating to accommodate the new limits, so it may take retailers a little while to embed these and for the market to properly assess the impact of the increased thresholds. It will be interesting to the measures that the FCA takes against firms should there be any breaches of the new rules and, if the new limits do give rise to fraudulent spikes, how the industry decides to tackles this.

Contributor: Lydia Aspinall

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