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The Financial Conduct Authority (FCA) is consulting on the proposed increase due to changes in the way people pay for goods or services caused by the coronavirus pandemic.
"Recognising changing behaviour in how people pay, as part of a wider consultation, we will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100", the FCA said.
The pandemic has accelerated the move to contactless payments over concerns about the hygiene of physical cash and touching payment terminal pin pads. It has been less than a year since the single contactless payment limit was increased from £30 to the present level of £45. Since that previous increase last April the use of contactless payment technology has proliferated further.
To allow for the proposed rise in the contactless limit and to maintain adequate protections for consumers, the FCA is proposing amendments to the regulatory technical standards on strong customer authentication (SCA) and common and secure methods of communication (SCA-RTS).
Under the current rules, consumers can make single contactless card payments of up to £45 until they either reach the cumulative contactless transaction threshold of £130 or they make five contactless payments in a row. At this point, consumers must satisfy the SCA two factor authentication standard by inserting the card into the payment terminal and entering their PIN.
As a corollary to the proposed increase to the single payment limit, the FCA is also proposing an increase in the cumulative payment threshold from £130 to £200. This is to avoid consumers having to re-authenticate with SCA so regularly that it dilutes the benefits of the single payment limit increase.
Since the UK's withdrawal from the EU, firms have been required to comply with the SCA-RTS, which are made by the FCA, instead of the EU's regulatory technical standards (EU‑RTS). At present, the SCA-RTS are substantially the same as the EU-RTS. The proposed increases to the contactless payment thresholds would therefore represent the UK's first major departure from the EU's implementation of the revised Payment Services Directive (PSD2) and the supplementary EU-RTS, which specify the current contactless payment limits of £45 and £130.
The proposed increases to the contactless payment thresholds further exemplify the FCA’s willingness to drive changes to ease commerce in the difficult retail environments brought about by the coronavirus pandemic. It will be interesting to see what further regulatory developments take place over the coming months to drive economic growth as we move away from the EU and lockdown restrictions.
Contributor: Ben Woof
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions.
03 March 2021