The United Kingdom’s Financial Conduct Authority has proposed removing its regulatory contactless payment limits, saying fraud controls are now strong enough to allow banks and other payment service providers (PSPs) to set their own limits.
Currently, the FCA limits the value and number of contactless payments that can be made before a personal identification number (PIN) entry or other authentication is required, according to the regulator’s quarterly consultation paper released Wednesday (Sept. 10).
FCA suggested the removal of these limits in January in response to the Prime Minister’s request that regulators consider ways to boost economic growth, and sought feedback in March on how it could approach those limits, the paper said.
After reviewing the feedback it received, the regulator said in the paper, “we considered that firms have clear incentives to minimize contactless payment fraud and should have more choices available to them in how they achieve that. As part of our work to become a smarter regulator, we believe that this is an area where overly restrictive regulations are not necessary to deliver good outcomes.”
Now, the FCA is seeking feedback on its proposal to allow banks and other PSPs to determine their approach to contactless payments, supporting innovation and growth while also requiring them to maintain low levels of risk, per the paper.
The proposal would allow PSPs to set their own contactless limits, while the FCA ensures they achieve low level of fraud, according to the paper.
The FCA is accepting feedback on the proposal until Oct. 15, according to a Wednesday press release.
“We’re seeing smarter payment technology and more well-established fraud controls, so it’s the right time to let firms tailor contactless payments to fit their customers’ needs and drive innovation,” David Geale, executive director of payments and digital finance at the FCA, said in the release. “While we wouldn’t expect to see immediate changes to limits by firms, they would have the flexibility to make payments more convenient for customers.”
In the FCA’s Jan. 16 letter to Prime Minister Keir Starmer, sent in response to the government’s recommendations on growth, the regulator said removing the £100 (about $135) contactless limit would allow firms and customers greater flexibility and level the playing field with digital wallets.
When the FCA sought comment on its proposal in March, it said this was one of about 50 measures it put forth to support economic growth in the U.K.