Scrapping of £100 contactless payment limit marks significant shift in financial transactions.
Headline: FCA Seeking Public Feedback on Whether to Raise or Eliminate the £100 Contactless Payment Limit
Hey there! Let me give you the lowdown on the current debate happening in the UK financial world. The Financial Conduct Authority (FCA) is considering whether to increase or scrap the £100 contactless payment limit. Here's what you need to know:
With the skyrocketing food inflation and soaring supermarket costs, the FCA is mulling over the idea of scrapping the £100 contactless limit and allowing banks and payment providers to set their own. This move is all part of the FCA's efforts to stimulate economic growth.
The FCA has already sent a letter to the government, suggesting they might remove the current limit, which they believe would provide more flexibility for both businesses and customers, leveling the playing field with digital wallets. If this happens, the UK would follow in the footsteps of the US, where there's no fixed limit for contactless payments.
Contactless payments have become the go-to choice for shoppers, accounting for 65% of all credit card and 77% of all debit card transactions in October 2024[5]. They were first introduced back in 2007 with a £10 cap, and the limit gradually increased until it reached the £100 mark in 2021.
However, there's a major concern when it comes to raising the contactless limit or even scrapping it altogether – the potential increase in fraud. Experts are worried that victims of stolen bank cards could lose more money before the card is blocked.
The FCA is still in talks with industry experts, such as UK Finance, to discuss the possibility of giving the industry more involvement and flexibility in the limit in the future.
Keep in mind that this is only a proposal at the moment, and the final decision depends on your feedback and that of businesses. The FCA is accepting public submissions until 9 May, so make sure to have your say on this matter before the consultation ends.
Stay tuned to This is Money for more updates on this exciting development in the world of payments!
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Sources:1. Financial Conduct Authority2. UK Finance3. UK Finance – Statistical Release: The UK card payments market in October 20244. Bank of England – Fraud statistics 20255. Northern Ireland Statistics and Research Agency – Consumer Prices Index (CPI) Inflation Rate (Harmonised): May 2024
- The Financial Conduct Authority (FCA) is proposing to remove the £100 contactless payment limit, which could provide greater flexibility for personal-finance management and business operations, similar to the system in the US.
- Experts are discussing the implications of this change, particularly in terms of finance and the potential increase in fraud, as victims of stolen bank cards could potentially lose more money before the card is blocked.
- The FCA is seeking public feedback and industry input, especially from organizations like UK Finance, to weigh the benefits of increased flexibility against the risks of higher fraud and determine the future of contactless payment limits.
- With the current £100 limit accounting for a significant amount of credit card and debit card transactions, increasing or eliminating this limit could significantly impact the personal-finance landscape in the UK.
- By voicing opinions on this matter, not only are individuals helping shape the future of their own personal-finance savings, but they are also contributing to the larger discourse on finance and economic growth in the UK.
