The limit on contactless spending with a credit or debit card will be scrapped in March 2026, and banks will be allowed to set their own restrictions.

The City watchdog, the Financial Conduct Authority (FCA), said the move would allow banks to respond to changing consumer demands, inflation and new technology.

Here we look at how the rules are changing and what the impact may be.

What are the current rules?

When you pay for something in person using a credit or debit card there is a limit of £100 on each single contactless transaction, under rules set by the FCA.

There are also limits on cumulative spending. You can spend up to £300, or make five contactless taps, before you will be asked for verification – typically your four-digit pin number. Anytime you use your pin or pay online the total is reset to £0.

There is no limit on payments using digital wallets, such as Apple Pay.

What is changing?

The FCA is allowing banks and card providers to remove the limits – on the single transaction and cumulative spending. Rising shop prices mean people are more likely to bump up against the £100 limit than they were when it was introduced in October 2021.

However, the FCA says it does not expect providers to take up the offer in the foreseeable future as most consumers are content with the current limits.

Isn’t this making life easier for fraudsters?

There is a concern that criminals who get their hands on a contactless card will be able to rack up more spending before they are stopped. The single transaction limit reduces the possibility to buy very expensive items and the cumulative limits keep a lid on the total spend.

The last figures from the banks’ trade body, UK Finance, show contactless fraud rates are low, at 1.2p for every £100 of transactions. The FCA says if card providers raise their single and cumulative limits to £150 and £450 respectively, as a worst-case scenario fraud could increase by 131% over the next three years.

But it says it expects banks to have fraud checks in place before raising or scrapping their limits. This may mean you get a text or call if you make a large contactless payment, or that a card is stopped if a series of unusual contactless payments are spotted.

It has also said that banks should allow customers to set their own limits so, if you are concerned about fraud or your own spending habits, you can put guards in place.

What if I lose my card or have it stolen?

In theory fraudsters will be able to spend more before being stopped. But rules on reimbursement apply.

You should cancel your card and report it stolen as soon as possible – phone your bank or use its app. If you fail to do so you may be asked to pay up to £35 of the losses.

Otherwise all unauthorised payments made with your card can be claimed back from your bank. You should inform it of any transactions that were made by the criminal and must do so within 13 months.

It must reimburse you unless it can show you were complicit in the fraud or failed to protect your card details.

Will I end up spending more?

Another concern that has been raised about contactless spending is the lack of friction. Paying with plastic has already made it harder to keep up with how much is leaving your wallet, and using contactless means there is less of a pause for thought.

Even though the limit is now £100, according to Barclays in 2024 the average contactless payment was £16.10 so there is no reason to think that everyone will rush out and spend up to any new limit their card provider sets.

But if you are concerned that you might overspend, you can implement your own limits or even turn off contactless payments.