The Treasury has said that the change from the current £45 limit would make transactions easier than ever and would provide a big boost to the UK’s struggling retail sector.

Although the limit is being increased, the number of consecutive transactions made before users are required to provide their PIN remains at five.

However, the cumulative transaction limit, which is how much they can spend across those five payments, will rise to £300.

The £100 uplift was announced in Chancellor Rishi Sunak’s budget yesterday, with the Financial Conduct Authority (FCA) later confirming the changes.

Sheldon Mills, executive director, consumers and competition, said: “During the pandemic, more people have been using contactless payments. We are changing our rules to help the industry continue to respond to the changing ways in which people prefer to pay.

“Increasing the regulatory limits allows the industry to raise the contactless limit in the future to meet the evolving expectations of customers and merchants for fast but secure ways to pay. When making any change, it is important that the industry continues to ensure the right protections are in place to keep payments safe and secure.”

There are concerns however, that the change is likely to exacerbate a decline in the use of cash. Last autumn, ATM data published by Link, which operates most of the UK’s cash machines, showed cash usage had nearly halved in three years.

Link revealed that in September 2017 there were some 170 million withdrawals from ATMS, however, last September this had fallen to just 88 million.

Earlier this week, consumer body Which? called for the UK Government to take immediate action to protect the future of cash for those who need it, as its latest analysis shows a spike in the number of people forced to pay to withdraw their own money from cash machines.