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Contact card limits could be AXED under new plans to change the way you pay at tills
The change could leave people vulnerable to fraud
A MAJOR change that will affect the way you pay at the till could be rolled out soon.
The Financial Conduct Authority (FCA) is considering plans to scrap the limit on contactless payments, making it easier to pay in just one tap.
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Contactless transactions currently have a £100 payment limit.
But the regulator is now considering whether removing or increasing this limit could benefit consumers, businesses and economic growth.
The move would allow you to make big purchases without the hassle of entering your PIN or fumbling around for cash.
The FCA said families and businesses across the country could benefit as they would have greater payment choice, flexibility and smoother purchases.
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The change could also give firms greater control and could help them to promote new payment methods and fraud prevention strategies.
But without a limit it could mean that shoppers will need to be extra cautious about their cards.
How would it work?
One option being considered is to allow firms, who use technology to maintain strong fraud controls, to set their own limits.
This is the current system in the US.
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The FCA said it will focus on how consumers are protected if contactless limits change.
Under the current rules firms are required to reimburse consumers in cases of unauthorised payment fraud, for example if their card is lost or stolen.
These rules will remain in place.
Contactless payment fraud is a very small part of overall payment fraud and a relatively small part of unauthorised payment fraud.
Fraudulent contactless spending totalled £41.5million in 2023, according to industry trade body UK Finance.
Although this was a 19% increase on the 2022 figure, UK Finance suggests the increase is at a much slower pace than the rise in the number of payments and amounts.
Credit card need-to-knows
Not using a credit card effectively can wreak havoc on your finances and your credit score.
If you don't keep up with repayments or default on your debt, you are likely to get a black mark on your credit record, which could affect your ability to get a credit card, loan or mortgage in the future.
It's important not to let yourself get sucked into overspending.
You should always clear the full balance as soon as possible.
If you have a poor credit score, don't bank on being approved for a card or getting the 0% deal you'd hoped for.
Card providers only have to give the advertised rate to 51% of applicants, so you could end up paying more interest than you bargained for.
If you've got a poor credit record, you're less likely to get the best rates.
And if you are looking for a new credit card, don't apply for lots at once.
After your 0% period is up, lenders can charge upwards of 40% interest, so if you have not repaid the debt fully by then, try to move the debt onto another 0% deal.
Any changes would need to provide "good customer outcomes" under FCA Consumer Duty guidelines that were published in 2023.
David Geale, executive director of payments and digital assets at the FCA, said 85% of people in the UK currently make contactless card payments each month.
He added: "This is the perfect opportunity to explore whether we can improve and increase trust in the UK’s payments system.
“We’ve worked fast to progress this work which is one of around 50 measures we put forward at the start of the year to help support economic growth across the UK and, in turn, improve lives.”
Meanwhile, economic secretary to the Treasury Emma Reynolds added: "Every regulator has a part to play in the collective mission to drive growth through our Plan for Change, which puts more money into working people’s pockets."
She added that the move is a "welcome step to ensure that families can safely benefit from more flexibility when making purchases".
What happens if contactless is used to make fraudulent payments?
Banks offer their customers protection against dodgy transactions but a higher limit could mean more money is taken from their accounts before the fraud is spotted.
If your card is lost or stolen then you should report it to your bank as soon as possible.
It will cancel the card so it can no longer be used to make any further payments.
Most banks will refund fraudulent purchases made using your card.
Visa has previously told The Sun it will "investigate and aim to give your money back as quickly as possible".
It added: "In most cases, your bank will return your money to you immediately while they investigate."
The UK first introduced contactless payments in 2007 and they had a £10 cap.
The cap has increased steadily over several years.
The current £100 limit was brought in during 2021.
Since then, tap-to-pay has soared in popularity and millions have ditched cash in favour of a quick tap at the tills.
Although not everyone is in favour of going contactless.
Campaigners have warned that moving to card payments could leave elderly, vulnerable and disabled customers at risk of not being able to access cash.
Is the contactless payment limit different from Apple Pay and Google Pay?
Apple Pay and Google Pay already allow customers to make contactless payments over the £100 limit.
But the transaction is subject to the approval of your bank and the retailer.
Apple Pay works by adding your debit or credit card to the wallet in your smartphone and using the touch ID or facial recognition software to confirm the contactless payment.
Google Pay operates in a similar way and asks users to take a photo of their card before using the app to make contactless payments in stores.
In the U.S., there is no fixed national limit for contactless payments, allowing most transactions of any amount to be made using contactless methods.
But for larger transactions, typically above $100, merchants or card issuers may require verification through a signature or PIN, depending on their policies.
But consumer groups are worried that if we follow the US is could encourage shoppers to overspend, which is an issue in the current cost of living crisis - where every penny counts.
The FCA has confirmed that at this stage plans for removing the contactless limit are being consulted on.
The plans have not yet been confirmed.
With the potential limitless change looming around the corner, shoppers might be worried about controlling spending habits.
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