Business
Contactless card payments could become unlimited under new plans
Kevin PeacheyCost of living correspondent, BBC News
Getty ImagesContactless card payments are set to exceed £100 and potentially become unlimited under new proposals to allow banks and other providers to set limits.
The proposals from the Financial Conduct Authority (FCA) mean entering a four-digit PIN to make a card payment could become even more of a rarity for shoppers.
If approved, purchases which can cost more than £100 – such as a big supermarket shop, or large family meal in a restaurant – could be made with a tap of a card.
The move would bring cards in line with payments made through digital wallets on smartphones which have no restriction, and reflects the ongoing changes in the way people pay.
When contactless card payments were introduced in 2007, the transaction limit was set at £10. The limit was raised gradually, to £15 in 2010, to £20 in 2012, then to £30 in 2015, before the Covid pandemic prompted a jump to £45 in 2020, then to £100 in October 2021.
If approved, the latest plan could be put in place early next year.
Every rise has been met with concerns about theft and fraud, and the FCA said card providers would only permit higher-value contactless payments for low-risk transactions and would carry the burden if things went wrong.
However, the freedom for banks to raise or even scrap the contactless limit suggests the four-digit PIN could soon become relatively redundant.
The FCA has proposed the changes, despite the majority of consumers and industry respondents to a consultation favouring the current rules.
Some 78% of consumers who responded said they did not want any change to the limits.
The FCA said it did not expect any quick changes, but providers would welcome the flexibility over time when prices rise and technology advances. They could also give customers the option to set their own limits.
Fraud and theft fears
The idea of high-value payments being made with a tap of a card will raise concern that thieves and fraudsters will target cards.
Various protections are already in place. In addition to the £100 single payment limit, consumers are often required to enter a PIN if a series of contactless transactions totals more than £300, or five consecutive contactless payments are made.
The FCA’s own analysis suggests raising the limits would increase fraud losses, but said detection was improving and would continue to get better.
It said any change would be reliant on providers ensuring payments were low-risk, through their fraud prevention systems.
Consumers would still get their money back if money was stolen by fraudsters, according to David Geale, from the FCA.
“People are still protected. Even with contactless, firms will refund your money if your card is used fraudulently,” he said.
Many banks already allow cardholders to set a contactless limit of lower than £100, or switch it off completely, and the FCA expected this option to be made widely available.
It argued that time savings, less “payment friction”, and a reflection of rising prices over time would make changes in the limits worthwhile.
Payment terminals would also need to be altered, as most are programmed to automatically refuse payments of more than £100 by card.
‘I only use my phone to pay’
Smartphones already have an extra layer of security, through thumbprints or face ID. That allows people to pay without limits.
Nearly three-quarters of 16 to 24-year-olds regularly use mobile payments, according to industry research.
Near the appropriately named Bank Street in Sevenoaks, 24-year-old Demi Grady said she rarely bothered carrying her cards around anymore because she used her phone for everything.
“I was in London the other day, my phone died and I couldn’t pay for stuff because I couldn’t remember my card details,” she said.
Her mum, Carrie, in contrast, uses her card when shopping.
“It would worry me more than be of benefit if they were to lose the limit of £100,” she said.
Robert Ryan, who had just bought a “winter-ish jacket” at a Harveys Menswear on Bank Street said he did not regard entering a four-digit number when paying as a hassle. Instead it could be a useful budgeting tool.
“I feel more secure in what I’m buying and it does give me a bit of a prompt to make sure I’m not overspending on my tap-and-go,” he said.
Richard Staplehurst, the owner of the store, said the majority of his customers were paying via a device.
He said that removing any obstacles to payment was great, but he did not want to be landed with a bill if a card was used fraudulently.
Stimulating the UK economy
The idea of removing the contactless limit was highlighted as one way the FCA was responding to the prime minister’s call to regulators to remove restrictions to create more economic growth.
The government has been striving to improve the UK’s economic performance, which has been slow for some time.
Other countries, such as Canada, Australia and New Zealand allow industry to set contactless card limits.
The FCA will consult on its proposals until 15 October.
The FTSE 100’s early promise faded on Friday amid downbeat economic growth figures and fresh US tech weakness.
The FTSE 100 index closed down 54.1 points, 0.6%, at 9,649.03.
It had earlier traded as high as 9,761.47.
The FTSE 250 ended 24.45 points higher, 0.1%, at 21,876.55, and the AIM All-Share ended up 3.70 points, 0.5%, at 751.36.
For the week, the FTSE 100 fell 0.2%, the FTSE 250 declined 0.9% and the AIM All-Share dropped 0.2%.
The mood was knocked by news that the UK economy shrank in October, according to figures from the Office for National Statistics.
Gross domestic product is estimated to have fallen by 0.1% in October, the same as in September, missing the FXStreet-cited market consensus for a 0.1% rise.
Services output fell by 0.3%, while construction output fell by 0.6%.
Production output, however, climbed 1.1%.
Citi analyst Callum McLaren-Stewart called the data “an unsurprising surprise”.
“A miss in October is perhaps not the most surprising outcome.
“Pre-budget uncertainty, and particularly the degree of speculation ahead of the event, can likely explain the miss relative to forecasts,” he said.
“For households, the prospect of income tax increases (which was still very much live during October) would likely have put the brakes on consumer spending,” the Citi analyst said, while, on the business side, “the associated lack of clarity around which sectors were to be taxed, will have likely delayed/slowed investment decisions”.
Berenberg analyst Andrew Wishart fears some of the slowdown in the UK economy could be due to underlying issues and not just budget uncertainty.
“We suspect that deteriorating fundamentals rather than a budget-related setback in confidence are to blame, so a recovery seems unlikely in the near term,” Mr Wishart said.
The data was seen as cementing a quarter-point interest rate cut at next week’s Bank of England Monetary Policy Committee meeting.
“Not that it was in any doubt at all, but today’s data essentially guarantees that the Bank of England will slash rates again next week.
“The focus will instead be on the guidance for rates in 2026.
“Any dovish undertones that hint at further easing ahead could bode ill for the pound,” Ebury analyst Matthew Ryan said.
Mr McLaren-Stewart agrees the data “clearly supports the consensus case for a cut”.
“However, we anticipate the (BoE) will be obliged to cut lower than currently priced in 2026, necessitating a terminal rate below 3%, supported by weaker GDP outlook,” he added.
Sterling fell back after the figures, after rallying in recent days.
The pound was quoted lower at 1.3356 US dollars at the time of the London equities close on Friday, compared to 1.3416 US dollars on Thursday.
The euro stood at 1.1739 US dollars, down against 1.1746 US dollars.
Against the yen, the dollar was trading higher at 155.69 yen compared to 155.24.
In Europe on Friday, the CAC 40 in Paris closed down 0.1%, while the DAX 40 in Frankfurt ended 0.5% lower.
Stocks in New York were lower at the time of the London equity close.
The Dow Jones Industrial Average was down 0.7%, the S&P 500 index was 1.4% lower, while the Nasdaq Composite was down 2.1%.
Technology stocks were firmly in the red once more as Broadcom slid 11% after results failed to match lofty expectations, while Oracle fell a further 4.6%.
The yield on the US 10-year Treasury was quoted at 4.19%, stretched from 4.12% on Thursday.
The yield on the US 30-year Treasury was at 4.86%, widened from 4.77%.
Supporting the dollar and pushing yields higher, comments from two officials who voted against the Federal Reserve’s decision to lower interest rates this week.
Chicago Fed President Austan Goolsbee had joined Kansas City Fed President Jeffrey Schmid in pushing to keep rates unchanged instead at the central bank’s two-day policy meeting, which ended on Wednesday.
“I believe we should have waited to get more data, especially about inflation, before lowering rates further,” said Mr Goolsbee in a statement Friday.
In a separate statement, Mr Schmid, who also pushed for no rate cut at the Fed’s October meeting, said: “Right now, I see an economy that is showing momentum and inflation that is too hot, suggesting that policy is not overly restrictive.”
In addition, Federal Reserve Bank of Cleveland President Beth Hammack said she would prefer interest rates to be slightly more restrictive to keep putting pressure on inflation, which is still running too high.
Back in London, InterContinental Hotels Group rose 2.3% as Jefferies upgraded to “buy” from “hold”‘, but Whitbread dropped 2.2% as the broker moved the Premier Inn owner the other way, to “hold” from “buy”.
Elsewhere, 1Spatial soared 45% after agreeing in principle to a proposed £87.1 million offer from VertiGIS, a portfolio company of London-based private equity firm Battery Ventures.
The Cambridge, England-based location master data management software company said the cash bid would value each 1Spatial share at 73 pence.
VertiGIS confirmed that it has completed commercial due diligence, has a clear understanding of the 1Spatial business and requires only limited confirmatory diligence to proceed to making a firm offer.
But Card Factory plummeted 27% after cutting its profit guidance as it said weak high-street retail footfall hurt its UK store sales performance.
The Wakefield, England-based greeting cards, gifts and celebration merchandise retailer said it expects adjusted pretax profit of between £55 million and £60 million for financial 2026, which ends on January 31, if current trading trends persist.
This is lower than the company’s previous guidance, which was for mid-to-high single-digit-percentage growth in adjusted pretax profit from £66.0 million in financial 2025, roughly £70 million.
Card Factory attributed weak consumer confidence to the lower high street footfall, which has persisted into its “most important” trading period.
Brent oil was quoted at 61.30 dollars a barrel at the time of the London equities close on Friday, up from 60.91 late on Thursday.
Gold was quoted at 4,291.08 dollars an ounce on Friday, higher against 4,254.97.
The biggest risers on the FTSE 100 were Burberry, up 54.50 pence at 1272.5p, Ashtead Group, up 128.0p at 5,138.0p, BT Group, up 3.7p at 180.5p, Intercontinental Hotels Group, up 185.0p at 10,235.0p and Fresnillo, up 46.0p at 2,904.0p.
The biggest fallers on the FTSE 100 were St James’s Place, down 49.0p at 1,316.5p, British American Tobacco, down 146.0p at 4,238.0p, Anglo American, down 80.0p at 2,817.0p, Weir, down 80.0p at 2,856.0p and Imperial Brands, down 86.0p at 3,179.0p.
Monday’s economic calendar has CPI figures in Canada.
Later in the week, interest rate decisions are due in Europe, Japan and the UK. In addition, US nonfarm payrolls figures will be released, plus UK and US inflation and retail sales data.
Next week’s UK corporate calendar has delayed full-year results from travel retailer WH Smith and half-year numbers from electricals retailer Currys.
Contributed by Alliance News.
Gatwick Airport is increasing the price of its drop-off zones by £3, bringing the minimum charge to £10.
The fee to allow drivers to stop outside the terminal for 10 minutes is to increase on 6 January.
The airport said the increase was “not a decision we have taken lightly” and blamed “a number of increasing costs, including a more than doubling of our business rates”.
Rod Dennis, RAC senior policy officer, said: “The words ‘Happy New Year’ are unlikely to be uttered by drivers dropping off friends and family at Gatwick in January.”
He added: “A more than 40% increase in the cost to drop-off is the largest we’ve ever seen and represents a doubling of the fee since it first came in.”
Southend Airport charges £7 for drop-off of up to five minutes, but that increases to £15 for between five and thirty minutes.
A drop-off fee of £5 was introduced at Gatwick in March 2021.
That increased to £6 in 2024, with the cost rising again to £7 in May.
A Gatwick spokesperson said: “This increase in the drop-off charge is not a decision we have taken lightly, however, we are facing a number of increasing costs, including a more than doubling of our business rates.
“The increase in the drop-off charge will support wider efforts to encourage greater use of public transport, helping limit the number of cars and reduce congestion at the entrance to our terminals, alongside funding a number of sustainable transport initiatives.”
They added that passengers can be dropped off without charge in long-stay car parks and catch a free shuttle bus to terminals.
Blue Badge holders remain exempt from the charge.
A government spokesperson said: “Airports are responsible for setting their own parking terms but must follow consumer law and justify their charges.
“We’re delivering a £4.3bn support package to cap business rates bill increases at 30% before other reliefs for the largest properties, including airports.
“Without intervention those would be up to 500%.”
Drop-off fees are also rising at Heathrow from 1 January from £6 to £7.
London City, the UK’s last major airport without a drop-off fee, is to introduce one later this month.
Out of mainland Europe’s biggest 10 airports, only one, Schiphol in Amsterdam, charges to drop-off, according to RAC research.
A tract of new tightly packed homes are viewed along the Boulder City Parkway on January 11, 2022 in Henderson, Nevada.
George Rose | Getty Images
Home values have been losing ground for much of this year, with previously huge annual gains shrinking to nothing. The result is that homeowners are losing equity.
Borrower equity fell 2.1% in the third quarter of this year compared with the same period a year ago, or a collective $373.8 billion, according to a report from Cotality. This comes after years of steep home prices gains and record equity. Even after the drop, homeowners still have an overall collective net equity of $17.1 trillion for homes with a mortgage.
For the average homeowner, the third-quarter equity declines translate to a loss of $13,400. In addition, the number of homes in a negative equity position, meaning they are worth less than the mortgage on them, increased by 21% from a year ago to 1.2 million.
“As the pace of home price growth slows and markets recalibrate from pandemic peaks, we’re seeing a clear shift in equity trends,” said Selma Hepp, chief economist at Cotality. “Negative equity is on the rise, driven in part by affordability challenges that have led many first-time and lower-income buyers to over-leverage through piggyback loans or minimal down payments.”
Those in a negative equity position likely purchased their homes more recently, when mortgage rates were higher and prices had peaked. Homeowners have also been pulling more equity out of their homes, thanks to huge gains in the last five years.
Home values are now roughly 52% higher than they were in January 2020, according to the S&P Cotality Case-Shiller national home price index. Even after mortgage rates increased in 2023, the average equity gain per homeowner was $25,000. In 2024, it was $4,900.
Not every market, however, is seeing the same dynamic. Boston, Chicago and New York City are all still in the positive, according to the Cotality report. The biggest losses were in Los Angeles, San Francisco, Washington, D.C., Miami and Houston, Texas.
“The future performance of highly leveraged loans will hinge on the strength of the U.S. economy and labor market. Even as expectations for continued price appreciation and economic resilience persist, it remains critical to closely monitor these loans in the months ahead,” Hepp said.
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