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| 1 minute read
Reposted from Linklaters - Financial Regulation Insights

FCA lays groundwork for scrapping contactless limit

The FCA is consulting on removing contactless payment limits. If the proposals are finalised, banks and other payment service providers will be able to allow contactless payments whenever they identify that a transaction poses a low level of risk.

In an engagement paper earlier this year, the FCA said that it wanted to allow more flexibility for contactless payments. Currently the FCA sets limits on the value and number of contactless payments that can be made before requiring customers to authenticate themselves.

Now the FCA proposes replacing the current regulatory limits with a new exemption from the general authentication requirements. Payment service providers will not be allowed to apply strong customer authentication for low-risk contactless electronic payments. Guidance will help firms identify whether a transaction poses a low risk taking into account, for example, the normal payment behaviour of the payer.

The FCA plans for its changes to come into force immediately once they are finalised. Payment service providers may still choose to use payment limits to help them manage risk, which includes continuing to apply existing limits.

The proposals are subject to consultation until 15 October 2025. The FCA plans to consult on wider changes to the strong customer authentication regime in due course.

Tags

sca, authentication, contactless, payments, uk, fintech