Defaqto Analysis Exposes Gaps in Banking App Features
Fewer than half of banks and building societies in the United Kingdom currently permit customers to set their own contactless card limits, according to a comprehensive analysis conducted by the star ratings website Defaqto. The research, carried out in February 2026, examined 31 account providers and found that only 13, or 42%, offer this specific functionality to their users.
Upcoming Regulatory Changes and Consumer Implications
This analysis comes ahead of significant rule changes set to take effect from March 19, 2026, implemented by the Financial Conduct Authority (FCA). These new regulations will allow financial firms to set contactless transaction limits higher than the current £100 ceiling, should they choose to do so. Importantly, firms are being actively encouraged to empower customers by allowing them to set personal limits or completely disable contactless functionality.
Katie Brain, a banking expert at Defaqto, emphasised the critical nature of this choice for consumers. "With the contactless cap being removed, choosing a bank or building society with the right in-app controls could make a real difference to how easily people manage their money," she stated. "Features like setting your own contactless limit or freezing payments give customers a practical way to put the brakes on spending if they need to."
Significant Disparities in Money Management Tools
Defaqto's investigation into both high street and digital-only banking applications revealed substantial variations in the money management features available to customers. While the option to set a personal contactless limit was scarce, the ability to freeze contactless payments was more common, offered by 21 out of the 31 institutions analysed (68%).
The FCA has clarified that existing consumer protections will remain firmly in place despite these changes. This means customers must still be reimbursed in cases of unauthorised fraud, such as when a card is lost or stolen. UK Finance, the industry body representing the banking and finance sector, indicated in December that it does not anticipate an immediate shift from the £100 limit. Any future adjustments, they assure, will be implemented cautiously, with a strong emphasis on maintaining security and robust fraud controls.
Defaqto's Recommendations for Financial Control
Defaqto, which provides star ratings for UK financial products, offers several key suggestions for consumers seeking to maintain better control over their finances through banking apps:
- Monitor Upcoming Payments: Twelve of the apps reviewed allow users to view upcoming direct debits and standing orders up to a chosen future date, providing clearer insight into available funds.
- Categorise Spending: Many applications automatically sort expenditures into categories, with some even permitting users to create custom categories. This facilitates easier tracking of outgoings and identification of potential areas for reduction.
- Consider a Personal Contactless Limit: If your provider offers this feature, setting a personal limit can act as a spending pause, requiring a PIN for larger purchases and encouraging more deliberate financial decisions.
- Activate Account Alerts: Enabling balance and transaction notifications helps keep account holders informed of money movements, potentially aiding in the prevention of overspending.
- Utilise Spending Blocks: Some providers allow customers to block specific transaction types, such as gambling payments, directly through the app, via telephone, or in a branch.
The overarching aim of the FCA's regulatory shift is to grant firms greater flexibility to adapt to evolving consumer demands, inflationary pressures, and advancements in payment technology in the years to come.
