Govt hikes contactless card transaction limit: Know how it will help facilitate hassle-free transactions

7-12-2020

The Reserve Bank of India (RBI) on Friday increased the limit for contactless card transactions from Rs 2,000 to Rs 5,000, effective from January 1 next year in an effort to boost the adoption of digital payments. The same has been done for e-mandates for recurring transactions through cards and the Unified Payment Interface (UPI).

What are contactless card transactions?

Contactless cards make use of Near Field Communication (NFC) technology enabling customers to make transactions at payment terminals enabled with the technology without physically swiping the card. As per current regulations, customers need not enter a PIN for such transactions if the purchase value is less than Rs 2,000. According to RBI, "In a Contactless NFC card, the card is read by keeping the card near the card reader. The EMV Chip & PIN cards and Contactless NFC cards are considered to be safer when compared to Magnetic Stripe cards."

Ashwini Kumar Tewari, Managing Director & CEO, SBI Card told: �The increase of the limit on contactless card payments from Rs 2,000 to Rs 5000 is a positive and progressive decision by the RBI. This surely will add to the customer convenience, especially, during the prevailing conditions and further boost the digital payments ecosystem in India.� Experts said it is a step in the right direction by the RBI and people have been asking it to enhance the limit.

Dilip Asbe, MD & CEO, NPCI: "The increased limit will help to boost the average value of the transaction and push the adoption of digital payments. The announcement will help RuPay cardholders to make secured contactless transactions of up to Rs 5,000 on the go thereby facilitating them with a hassle-free transaction experience. Similarly, this will be a major boost to the users of recently launched UPI AutoPay functionality for the customers to execute their high ticket recurring payments like utility bills, investments, two-wheeler EMIs, consumer durable EMIs etc. seamlessly. The move will also help customers to on-board into BHIM UPI for performing easy and convenient P2P and P2M transactions."

To create an enhanced environment for customers to use digital payment products in a relatively safe and secure manner, the RBI said it plans to pursue a uniform security framework for digital payment channels in the county via the digital payment security controls directions. It is proposed to issue the Reserve Bank of India (Digital Payment Security Controls) Directions, 2020, for regulated entities to set up a robust governance structure for such systems and implement common minimum standards of security controls for channels like internet, mobile banking, and card payments, among others, the RBI said.

Naveen Kukreja, CEO & Co-founder, Paisabazaar.com, said: "The decision to enhance the upper limit on contactless card payments from Rs 2,000 to Rs 5,000 is progressive and will increase customer convenience, especially in these pandemic times when social distancing and staying contactless is crucial. This should also further boost digital payments, which would help the overall financial ecosystem."