diff --git a/allways/cli/swap_commands/admin.py b/allways/cli/swap_commands/admin.py
index 1f446b1..ebc08df 100644
--- a/allways/cli/swap_commands/admin.py
+++ b/allways/cli/swap_commands/admin.py
@@ -112,13 +112,13 @@ def set_reservation_ttl(blocks: int):
 @admin_group.command('set-fee-divisor')
 @click.argument('divisor', type=int)
 def set_fee_divisor(divisor: int):
-    """Set the fee divisor (100 = 1% fee, 50 = 2% fee, 200 = 0.5% fee).
+    """Set the fee divisor (100 = 1% fee, 50 = 2% fee, 20 = 5% fee max).
 
     Example:
         alw admin set-fee-divisor 100
     """
-    if divisor < 2:
-        console.print('[red]Divisor must be at least 2[/red]')
+    if divisor < 20:
+        console.print('[red]Divisor must be at least 20 (max 5% fee)[/red]')
         return
 
     _, wallet, _, client = get_cli_context()
diff --git a/allways/constants.py b/allways/constants.py
index 8176128..1f20ec8 100644
--- a/allways/constants.py
+++ b/allways/constants.py
@@ -52,6 +52,7 @@
 # via `alw admin` commands and read from the contract at runtime.
 DEFAULT_FEE_DIVISOR = 100  # tao_amount / fee_divisor — read from contract, fallback here
 SWAP_FEE_PERCENT = 0.01  # display only — derived from DEFAULT_FEE_DIVISOR
+MAX_FEE_PERCENT = 0.05  # contract enforces divisor >= 20 (max 5% fee)
 MIN_COLLATERAL_TAO = 1.2  # Must be > max swap amount
 DEFAULT_FULFILLMENT_TIMEOUT_BLOCKS = 30  # ~5 min — `alw admin set-timeout`
 DEFAULT_MIN_SWAP_AMOUNT_RAO = 100_000_000  # 0.1 TAO — `alw admin set-min-swap`
diff --git a/smart-contracts/ink/lib.rs b/smart-contracts/ink/lib.rs
index b57edf6..703cafb 100644
--- a/smart-contracts/ink/lib.rs
+++ b/smart-contracts/ink/lib.rs
@@ -86,6 +86,9 @@ mod allways_swap_manager {
     const REQ_EXTEND: u8 = 3;
     const REQ_EXTEND_TIMEOUT: u8 = 4;
 
+    // Fee cap: divisor >= 20 means fee can never exceed 5%
+    const MIN_FEE_DIVISOR: u128 = 20;
+
     // =========================================================================
     // Internal helpers
     // =========================================================================
@@ -719,7 +722,7 @@ mod allways_swap_manager {
                 swap.status = SwapStatus::Completed;
                 swap.completed_block = self.env().block_number();
 
-                // Fee from miner collateral -> accumulated_fees (fee_divisor >= 2 enforced by setter)
+                // Fee from miner collateral -> accumulated_fees (divisor >= 20 enforced, max 5%)
                 #[allow(clippy::arithmetic_side_effects)]
                 let fee = swap.tao_amount.saturating_div(self.fee_divisor);
                 let miner_collateral = self.collateral.get(swap.miner).unwrap_or(0);
@@ -1100,7 +1103,7 @@ mod allways_swap_manager {
         #[ink(message)]
         pub fn set_fee_divisor(&mut self, divisor: u128) -> Result<(), Error> {
             self.ensure_owner()?;
-            if divisor < 2 {
+            if divisor < MIN_FEE_DIVISOR {
                 return Err(Error::InvalidAmount);
             }
             self.fee_divisor = divisor;