Another week, another regulatory concession masquerading as consumer empowerment. The Financial Conduct Authority's decision to let banks scrap contactless spending limits reveals more about financial theatre than financial progress. Let us pull back the velvet curtain.

We are told this decision responds to changing consumer habits. A curious framing, given that 76% of consumers surveyed by the FCA itself wanted limits maintained or reduced. Apparently what consumers demand and what banks demand for consumers are two entirely different things. The term inflation gets thrown around like confetti, suggesting this is merely keeping pace with rising prices. Conveniently ignoring that real wages haven't kept pace at all.

Banks will assure you their fraud detection systems are bulletproof. The same institutions that still struggle to prevent authorised push payment scams draining life savings. The same fraud detection algorithms that routinely freeze grandmothers buying tea cosies yet allow serial tap and go sprees by thieves with stolen cards. I'm reminded of security expert Bruce Schneier's observation that convenient security is often no security at all.

Consider what behavioural economists call the pain of paying. Contactless transactions reduce this psychological friction far more effectively than any loyalty scheme. A 2023 University of Cambridge study found consumers spend 17.3% more when using contactless versus cash. For credit cards specifically, this jumps to 23.1%. Banks understand this better than anyone. After all, they invented the playbook.

The parallels to credit card history are striking. When banks first mailed unsolicited cards to American consumers in the 1960s, critics warned of debt spirals. Bankers dismissed these concerns, touting convenience and modernity. Today's UK households carry £1.8 billion in credit card debt accruing interest monthly according to Bank of England figures. But why let history interfere with fee revenue?

Retailers cheer this development, naturally. Faster throughput means more transactions per hour. Hospitality groups speak of enhanced customer experience while quietly upgrading terminals to process higher ticket sizes. When was the last time corporate interests aligned so perfectly against consumer data?

Missing from this conversation are three critical angles. First, the environmental impact. Cash transactions generate 2.2g CO2 equivalent per transaction versus 4.6g for contactless according to MIT research. Digital doesn't mean green.

Second, financial exclusion. The Cash Action Group reports 4.2 million UK adults still rely primarily on cash. These are precisely the demographics most vulnerable to predatory lending. Today's announcement accelerates their marginalisation.

Third, generational financial literacy. Research by MoneyHelper shows under 35s are three times more likely to view contactless as free money versus debit transactions. Normalising large frictionless payments compounds this dangerous perception.

The FCA insists consumers can set personal limits. Will this option be buried in banking apps behind seven submenus like the WiFi settings on your router? Or promoted as prominently as overdraft facilities? Recent history suggests we all know the answer.

There's a cruel irony in regulators citing technological advancement when UK banking infrastructure still creaks louder than a haunted houses floorboards. Faster Payments still can't match EU instant settlement systems. Open Banking implementation remains half baked. But suddenly our fraud detection can handle unlimited contactless transactions. How convenient.

Banks aren't charities. They make money on transaction volume through merchant fees and through revolving credit balances. Contactless drives both. Pretending this deregulation serves anyone but shareholders requires Olympic level cognitive dissonance.

Meanwhile, the Bank of England reports unsecured consumer debt rose £1.3 billion last quarter alone. Inflation squeezed household budgets, yet contactless spending increased 17% year on year. Correlation isn't causation, but only the willfully blind wouldn't connect these dots.

Security concerns aren't hypothetical. The UK Cards Association reports contactless fraud hit £24 million last year, up 38% from pre limit increase levels. Now imagine that trajectory without any ceiling. The banks promise reimbursement for fraud, conveniently omitting the hours consumers spend navigating claims processes.

Perhaps most telling is the timing. This announcement lands right before Christmas shopping season, when consumer vigilance traditionally wanes. Coincidence? Please. This is the same industry that times overdraft fee changes to payroll cycles.

Theatre demands willing suspension of disbelief. We're asked to believe that banks craving transaction volume and consumers needing protection share identical interests. That tapping £500 for a TV requires less scrutiny than signing a cheque for £100. That shopkeepers won't face pressure to accept ever larger contactless payments even as fraud disputes increase.

Contactless payments offer genuine convenience. Nobody misses fumbling for exact change in a downpour. But convenience without safeguards becomes recklessness. Every behavioural nudge has consequences, whether in calorie consumption or credit balances.

Financial innovation should serve society, not just shareholder returns. Removing spending friction while real wages stagnate and groceries cost 17% more than three years ago isn't progress. It's lubricating a slide into perpetual indebtedness.

The FCA has essentially approved retail banking's version of placing cookie jars on every desk while insisting diabetes management is a personal responsibility. How very modern of them.