By Aaron Holmes, CEO of Kani Payments
Contactless payments now dominate in-store spending in the UK. As of 2024, 95% of all in-store card transactions under £100 are made using contactless—a 1.2% increase from the previous year. I had the privilege of being part of the team that introduced the first UK contactless cards back in 2008, and I’ve seen the technology evolve from an experimental convenience to an everyday expectation.
Today, nearly every card or smart device comes equipped with contactless capability, making payments faster and more seamless than ever. But with convenience has come a complex regulatory framework designed to balance user experience with security and accountability. Currently, the UK allows contactless card payments of up to £100 per transaction, or up to £300 cumulatively before a customer is prompted for authentication. However, this model is under review.
The Financial Conduct Authority (FCA) is now considering significant updates to these limits—including raising or removing the caps altogether—as part of its broader effort to support payment innovation and economic growth. This moment marks a pivotal shift for the UK’s payments landscape, presenting both opportunity and challenge.
From User-Defined Limits to Regulatory Uniformity
The original vision for contactless was rooted in user choice: customers could define their own risk appetite—for instance, setting a personal limit of £50 below which payments wouldn’t need verification. But crucially, these payments were at the consumer’s own risk, as outlined in the voluntary Banking Code that preceded today’s regulatory framework.
That vision changed with the implementation of the UK’s Payment Services Regulations (PSRs) and Electronic Money Regulations (EMRs), which transposed EU directives— PSD2 and the EMD—into domestic law. These regulations introduced a formalised legal framework that superseded the voluntary Banking Code, mandating uniform contactless limits across issuers.
Under this model, financial institutions became obligated to restore customers to their original financial position by the next business day after an unauthorised transaction—a principle that shifted the burden of fraud prevention to the banks. However, some banks have blurred this obligation by tying customer refunds to the success of internal chargeback processes, effectively telling customers, “If we don’t recover the funds, neither do you.” This practice contradicts the original regulatory intent and can erode consumer trust.
Global Context: How the UK Measures Up
Contactless limits vary widely across regions, reflecting different regulatory philosophies and risk appetites. The UK already offers one of Europe’s most generous caps, reinforcing its role as a leader in payment innovation.
Other markets are moving in divergent directions. Japan has increased limits substantially; the US has largely removed them altogether, allowing merchants to set their own thresholds, often up to $10,000 for networks like Visa, Mastercard, American Express and Discover. As such, the UK finds itself at an inflection point, deciding whether to maintain its leadership by expanding limits or risk falling behind more progressive payment ecosystems.
Efficiency, Insights and the Case for Higher Limits
Raising or removing contactless limits promises faster transactions, less friction at checkout and greater convenience—especially in high-volume sectors such as retail, hospitality or transport. Even small reductions in average transaction time can yield significant operational benefits and customer experience improvements at scale.
Beyond speed, there’s a powerful case to be made for data. Higher-value contactless transactions generate richer datasets. Not just more transactions, but more informative ones. With larger volumes and higher spend thresholds, businesses can gain deeper insight into consumer behaviour, spending patterns and preferences. This data can be used to refine loyalty programmes, personalise services and target offers with greater precision.
However, the expansion of contactless also demands a rethink of fraud controls. In markets without static transaction limits, fraud prevention must be dynamic. Many issuers now use machine learning and behavioural analytics to assess risk in real time, triggering biometric or PIN verification only when something seems anomalous. These intelligent systems learn a customer’s typical spending profile and flag subtle deviations that a rules-based system could miss.
To support higher limits responsibly, UK payment providers must invest in these advanced fraud prevention systems. Just as importantly, they must develop transparent, streamlined dispute resolution frameworks. Customers should not be burdened with navigating internal recovery processes to receive the protections they are legally entitled to. Ensuring compliance with consumer protection regulations will be critical to maintaining trust as transaction thresholds increase.
The Path Forward for the UK
As the FCA evaluates changes to contactless limits, the UK faces a defining moment in its payments evolution. Higher limits could accelerate commerce, improve customer journeys and unlock more meaningful data—all while reinforcing the UK’s status as a payments innovator on the global stage.
But that progress must be accompanied by a serious commitment to security, infrastructure investment and user education. Striking the right balance between innovation and protection will determine whether the next chapter of contactless payments is seamless, secure and scalable.
The opportunity is clear: to create a future with fast, high-value contactless transactions as the norm, where security and trust are baked into every tap.
