The UK Financial Conduct Authority (FCA) plans to eliminate the £100 limit on contactless payments and introduce a new open finance framework aimed at improving financing for small and medium-sized enterprises (SMEs).
In response to a request from the Prime Minister and Chancellor to adopt a more risk-oriented approach to support the Government’s growth agenda, the FCA has committed to a digital-first strategy. This initiative will be led by a newly appointed executive director for payments and digital finance, who will also oversee the Payment Systems Regulator.
In addition to ongoing reforms concerning securities settlement, digital assets, and pensions, the FCA is considering a range of new measures. These include the introduction of variable recurring payments in the open banking sector and leveraging upcoming powers under the Data (Use and Access) Bill to enhance open finance, with a particular focus on SME lending.
In a noteworthy development, the FCA intends to remove the £100 limit on contactless transactions, citing the need for increased flexibility for firms and consumers. This change draws inspiration from practices in the US and aims to create a more level playing field for digital wallets, which currently bypass the restrictions placed on traditional payment cards at checkout due to biometric authentication.
The FCA is urging the Government to contribute by addressing three key legislative areas: improving digital identity authentication and verification to unlock significant potential, enhancing the quality of the Companies House database to lower business costs, and digitizing court systems to minimize delays.