In March 2025 the FCA published an engagement paper on options to change the way contactless payments are authenticated in the UK. Currently there is a fixed £100 limit, with a £300 cumulative limit or 5 consecutive contactless transactions that all require Strong Customer Authentication (SCA) if exceeded. The FCA published a consultation, that closed on the 15th October 2025, which proposed to add an exemption for contactless transactions that are low risk, based on Issuers risk analysis and the Consumer Duty requirements.
On Friday 19th December 2025, the FCA confirmed that "Banks and payment providers with strong fraud controls will be able to set their own limit for contactless payments, allowing them to better respond to changing consumer demands, inflation and new technology. They are also being encouraged to let customers set their own limit, or turn contactless off altogether, as many high street banks already do."
This comes into effect from March 2026 but don't expect any immediate changes to how Issuers manage things, merely a change in the regulation to allow Issuers to apply a low risk exemption in the future.
We expect the Issuers to:
• Review and confirm their contactless risk strategy, including how limits align to their risk models and fraud risk appetite
• Develop solutions to allow customers to set their own limits, e.g. single and cumulative, these could potentially be lower than they are today or turned off completely
We envisage different timelines for deployment of new solutions across the industry. With contactless payments now making up 61% of UK card payments*, any change can be impactful, albeit this one may be offset by the increasing use of digital wallets that inherently provides the Two Factor Authentication required by SCA.
At the same time, online PIN is starting to be introduced into the UK market (traditionally an offline PIN market), allowing customers to enter their PIN after the ‘tap’ rather than inserting the card into the PED and completing a traditional Chip and PIN transaction. Adoption currently remains below 20% of transactions, so this is still some way from becoming mainstream, with traditional PEDs continuing to be required as fallback.
From a retailer perspective there are a number of considerations:
• There will no longer be consistency in when the SCA step up occurs, as it will now be risked based, and customers will, in the future, have differing limits from the current £100 per transaction or £300 cumulative.
• Consumers may get used to very infrequent step ups, so whilst the overall level of step ups decreases, the impact of customers walking away from self-service tills without having paid could increase.
• Higher limits will make Tap to Pay (accepting contactless payments directly in an iPhone, with no PIN Pad or contact chip interface) more attractive (while the UK rolls out online PIN) as more transactions can be completed without a fall back to a PED to take Chip & PIN. But if your risk resides at your self-service tills, as a retailer you are unlikely to be using iPhones at these terminals to accept payments.
Speak to your Gateway or Acquirer to confirm if any specific technical changes will be required. In addition, undertake a risk assessment of what it means for your business. This should include staff training to avoid any confusion caused by the potential complexity this change introduces.
Review and prepare for:
✅ Training Staff
Prepare scripts for explaining:
> Why PIN prompts may vary by card or customer.
> How to assist customers who experience declined contactless transactions.
> Include guidance on helping vulnerable customers.
✅ Update Customer Messaging
Refresh signage and digital prompts:
> “Limits may vary by card issuer.”
> “PIN may be requested for security reasons.”
> Consider FAQs on your website and app.
✅ Monitor Issuer Behaviour
> Track how major banks implement contactless limits.
> Adjust operational processes for variability across cards.
CBS Change Partners have 20 years' experience in the changing payments landscape and are well placed to help you in ensuring the contactless changes don't have a negative customer or cost impacts. Reach out to see how we can help you realise the opportunities this presents and mitigate the risks.
* Over half of UK adults now use mobile wallets | Insights | UK Finance