On 3 March 2021, the FCA published Policy Statement 21/2: Amendments to single and cumulative transaction thresholds for contactless payments (PS21/2).

Earlier this year the FCA issued a consultation paper setting out proposals to amend the technical standards on strong customer authentication and common and secure methods of communication (SCA-RTS), the FCA document ‘Payment Services and Electronic Money – Our Approach’ and chapter 15 of the Perimeter Guidance Manual. Part of the proposals concerning the SCA-RTS related to increasing the single and cumulative transaction thresholds for contactless payments from £45 up to £100 (or potentially a maximum of £120) and from £130 to £200 respectively.

In PS21/2 the FCA sets out its final rules concerning changes to the single transaction limit and cumulative limits for contactless payments. The deadline for comments on the other issues set out in the earlier consultation paper is 30 April 2021. The FCA will issue a further policy statement on these later this year.

The SCA-RTS includes exemptions to the application of strong customer authentication. One such exemption is the contactless exemption at Article 11. Issuers may choose not to apply strong customer authentication to contactless point of sale transactions if specific conditions are met. The conditions to apply the contactless exemption are twofold: (a) the individual amount of the transaction must not exceed £45; and (b) either the cumulative amount of transactions must not exceed £130 since the last time strong customer authentication was applied, or the number of consecutive contactless transactions initiated must not exceed five since the last application of strong customer authentication. The SCA-RTS prescribe maximum limits for contactless payments at point of sale. Card issuers set the contactless limit applicable to a customer’s contactless transactions up to the maximum amounts set out under the SCA-RTS. In response to the coronavirus pandemic, the industry increased the contactless limit from £30 to £45 on 1 April 2020.

In PS21/2 the FCA confirms that Article 11 of the SCA-RTS will be amended so that strong customer authentication is not required for single contactless transactions up to the value of £100 per transaction. This is subject to the cumulative thresholds in Article 11. The cumulative transaction value threshold will be increased from £130 to £300.

The cumulative threshold is being increased to £300, instead of £200 as proposed. The FCA states that such an increase will reduce the number of times a consumer will have to provide strong customer authentication when using contactless payment but ensures a proportionate need for strong customer authentication if consumers are regularly making higher value payments. The FCA states that firms should ensure the adequacy of their systems and controls before increasing their contactless limits.

The changes came into force on 3 March 2021.

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