FCA lifts £100 contactless cap, shifting focus to fraud controls

By Vriti Gothi

The UK’s Financial Conduct Authority (FCA) has confirmed that it will lift the £100 limit on contactless card payments from March, a regulatory change that is set to materially alter how higher-value everyday transactions are conducted across the country. The move reflects the regulator’s view that the payments ecosystem has evolved sufficiently to rely less on fixed transaction caps and more on sophisticated fraud controls embedded within card networks and bank systems.

Contactless payments have grown rapidly in the UK over the past decade, driven by changing consumer preferences, improvements in terminal infrastructure, and increased comfort with digital-first financial services. What was once positioned as a low-value, convenience-led payment method is now widely used for grocery shopping, dining, and travel, blurring the line between contactless and traditional card-present transactions.

By removing the £100 ceiling, the FCA is effectively shifting the emphasis from blanket transaction limits to risk-based monitoring. Existing safeguards, such as cumulative spend thresholds, transaction velocity checks, and issuer-led fraud detection, will play a larger role in determining whether payments are approved. The regulator has positioned the change as a way to enhance consumer convenience while maintaining appropriate levels of protection.

However, the decision has also brought renewed focus on fraud risk and its distribution across the payments ecosystem. The FCA has estimated that lifting the cap could result in up to £31.3 million in additional contactless fraud per year, representing a 131% increase compared with current levels. While this figure remains small relative to overall card payment volumes, it raises questions about whether higher-value contactless transactions could alter criminal behaviour over time.

The merchant perspective is a key part of the debate. Although contactless payments reduce queue times and improve checkout efficiency, chargeback liability and fraud-related losses remain sensitive issues for retailers, particularly in sectors with thin margins. If fraud levels rise disproportionately, some merchants may reassess how and when contactless payments are accepted, potentially reintroducing friction into transactions that are intended to be seamless.

For banks and payment service providers, the removal of the cap increases the strategic importance of real-time fraud detection and behavioural analytics. Static controls designed around low-value payments may be less effective as transaction values rise, making continuous monitoring of customer behaviour, device signals, and transaction context more critical. Rather than focusing solely on the card or transaction amount, issuers are expected to lean more heavily on holistic risk assessment models that evaluate whether a payment aligns with a customer’s normal behaviour.

The policy change also comes at a time when regulators globally are encouraging innovation in payments while maintaining consumer trust. The UK’s approach contrasts with some European markets that have opted for hybrid models, combining higher limits with stepped-up authentication at certain thresholds. How the UK ecosystem responds may influence future regulatory thinking around frictionless payments and proportional risk controls.