Contactless card payments likely to be limitless – Daily Business

Consumers may soon have limitless payment options on their debit cards with plans to scrap the £100 maximum currently allowed.

New proposals to allow banks and other providers to set limits have again raised concerns over potential fraud and consumers running up debt.

But the proposal from the Financial Conduct Authority (FCA) could spell the end for PIN numbers and it says the risk will be carried by the banks which may set their own limits.

The move would bring cards in line with payments made through digital wallets on smartphones which have no restriction, and reflects the ongoing changes in the way people pay.

When contactless card payments were introduced in 2007, the transaction limit was set at £10. The limit was raised gradually, to £15 in 2010, to £20 in 2012, to £30 in 2015, before the Covid pandemic prompted a jump to £45 in 2020, then to £100 in October 2021.

However, consumers are not convinced of the need to scrap the limit. A survey showed 78% of consumers did not want any change.

Even so, nearly three-quarters of 16 to 24-year-olds regularly use mobile payments, according to industry research.

Danni Hewson, head of financial analysis at AJ Bell, said: “Banks are still on the hook for covering fraudulent payments, so it may be that not much changes from the status quo, because the higher a bank chooses to set a contactless limit, the more it may have to pay out to compensate customers for fraudulent transactions.

“Indeed based on industry feedback the FCA says it expects most card providers continuing with the £100 limit for the time being.

“The potential for higher levels of fraud clearly exists, but that’s more of a problem for banks rather than consumers. This is probably one of those changes that sounds more scary and transformative than it ultimately turns out to be.”