Contactless “tap-to-pay” has become the default way to pay for millions in the UK, but it has always come with a ceiling. Now, that could be about to change. The UK’s financial regulator has proposed scrapping the £100 contactless payment limit, a move that could usher in a new era of convenience for shoppers and present fresh opportunities for businesses.
The End of the £100 Limit? What’s Being Proposed
The Financial Conduct Authority (FCA) has launched a consultation on removing the mandatory £100 cap on single contactless card transactions. This doesn’t mean limits will vanish overnight; instead, the proposal would give banks and card providers the flexibility to set their own limits for customers.
- Flexibility for Providers: The change would allow card issuers to decide on appropriate limits based on their own risk assessments and fraud detection capabilities.
- Aligning with Digital Wallets: The move would bring physical cards more in line with digital wallets like Apple Pay and Google Pay, which already allow for unlimited contactless payments when authenticated by biometrics (fingerprint or face ID).
- Consumer Choice: The FCA has encouraged providers to continue offering customers the ability to set their own contactless limits or turn the feature off entirely.
Convenience vs. Security: Addressing the Risks
While the prospect of paying for a large weekly shop or a tank of fuel with a simple tap is appealing, the primary concern for many is the risk of fraud if a card is lost or stolen. However, the industry points to several factors that mitigate this risk.
- Low Fraud Rates: According to the latest UK Finance report, contactless fraud is currently very low, at around 1.3p for every £100 spent.
- Existing Protections: Consumers are still protected. Banks are legally required to refund money lost to unauthorised fraud, which includes transactions made on a lost or stolen card.
- Advanced Technology: The FCA notes that “smarter payment technology and more well-established fraud controls” make this the right time to consider more flexible limits.
What This Means for UK Businesses
For businesses, particularly retailers and hospitality venues, a higher or unlimited contactless limit could bring significant benefits. It can speed up transactions, reduce queues, and improve the overall customer experience. However, to take full advantage, businesses must ensure their payment infrastructure is up to the task.
Investing in modern point-of-sale (POS) systems is crucial. For businesses looking to upgrade their technology to handle evolving payment trends, securing the right finance is key. Information on government support and finance options can be a useful starting point. Working with a specialist finance broker provides access to a wide network of lenders and tailored solutions. With connections to over 95 lenders, brokers can help you navigate the market effectively.
Key finance solutions for tech upgrades include:
- Asset Finance: A cost-effective way to lease or purchase new payment terminals and other essential equipment without a large upfront capital outlay.
- Business Loans for Investment: To fund a broader digital transformation, including new e-commerce platforms, software, and integrated payment systems.
- Merchant Cash Advance: A flexible option for businesses with fluctuating card sales, where repayments are made as a percentage of future card takings.
Partnering with a finance broker simplifies finding and applying for the right funding. They can assess your business’s needs and connect you with the most appropriate lenders to finance the technology that will keep you competitive. For further impartial advice, explore resources from the British Business Bank.
Conclusion
The proposal to scrap the £100 contactless limit marks the next logical step in the evolution of payments in the UK. While a final decision is yet to be made, the direction of travel is clear: towards greater convenience and flexibility. For businesses, this is a prompt to review their own payment systems and ensure they are ready to meet the expectations of modern consumers, with a range of finance solutions available to support necessary investments.
Is your business ready for the future of payments? Explore tailored finance solutions for technology and equipment upgrades today and connect with our network of over 95 lenders.