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RBI enhances contactless card limit to ₹5,000 from ₹2,000

The Reserve Bank of India (RBI) has enhanced limits on contactless card transactions and electronic mandates on cards and the Unified Payments Interface (UPI) to ₹5,000 from ₹2,000. The new limits will apply from January 1, 2021 onward and operational instructions will be issued in the coming weeks.

“In order to expand the adoption of digital payments in a safe and secure manner, it is proposed to enhance, at the discretion of the user, the limits for contactless card transactions and e-mandates for recurring transactions through cards (and UPI) from ₹2,000 to ₹5,000 from January 1, 2021,” RBI Governor Shaktikanta Das said in a statement on December 4. This increased limit brings India’s maximum NFC payment ceiling in line with markets like Canada and the UK, where the limits are roughly the same as the new India threshold.

In its Statement on Developmental and Regulatory Policies on December 4, the RBI said that contactless card transactions and e-mandates on cards (and UPI) for recurring transactions have enhanced customer convenience. “These are also well-suited to make payments in a safe and secure manner, especially during the current pandemic,” the central bank said.

Back in May 2015, the RBI had waived the requirement for an additional factor authentication (AFA) in case of small value card present transactions using Near Field Communication (NFC) contactless technology. For any transaction above ₹2,000, customers would need to enter their PIN, which acts as a AFA, the RBI said.

From next year, customers can use their NFC-enabled cards to pay for goods and services worth up to ₹5,000, without entering a PIN. Customers can also set up e-mandates, via their cards or UPI IDs, to make recurring payments worth up to ₹5,000, without the need for a PIN.

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Dilip Asbe, managing director and chief executive officer, National Payments Corporation says that the increased limit will also help to boost the average value of transaction and push the adoption of digital payments. “The announcement will help RuPay cardholders to make secured contactless transactions of upto ₹5,000, on the go thereby facilitating them with 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,” he said.

In a statement Manish Patel, founder and CEO, Mswipe said, that contactless payments have spiralled from 13% of total transactions in January 2020 to 30% of total transactions in November 2020. “RBI’s move of increasing the limit to Rs.5,000 will unlock the true potential of contactless payments and allow Small-Medium-Enterprises to accept digital payments for larger ticket size transactions. Be it a monthly kirana bill, spa service or a course fee, the spectrum of products and service that can be paid through contactless payments will definitely expand with this new move.”

However a senior payments industry executive told MediaNama, that while the RBI’s move will boost the value of NFC transactions for every customers and increase the use of e-mandates for wider use-cases, it is important that there are necessary controls to prevent fraud. “It is possible that with higher NFC limits that fraudsters can dupe customers, for an even greater sum of money. Payment companies and banks will need to ensure customers are properly educated and that there are some controls, like customers’ setting their own limits up to ₹5,000 for example,” this person said on the condition of anonymity.

T R Ramachandran, Group Country Manager, India and South Asia, Visa said that over the last five years consumers have shown a preference for using contactless cards for small-ticket, daily purchases. “As evident in recent months, there is strong consumer preference for digital payments and the new enhanced limits for e-mandates and contactless cards will help transition millions of Indian consumers from cash to fast, convenient and secure forms of digital payments,” he said in a statement.

A spokesperson from Pine Labs said that with the increase in limit, “we foresee it would further aid in faster checkouts and increased transaction volume thereby enabling merchants to reduce cash handling costs.”

“We have in recent months seen a marked increase in contactless transaction on our network. This is because of the fact that the entire transaction is contactless with no one but the cardholder touching the card and also very importantly the ease of use,” said Deepak Chandnani, managing director, Worldline South Asia and Middle East. 

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**Update (December 4, 2020 4:35 pm): Updated with statements from Manish Patel, CEO, MSwipe, Dilip Asbe, CEO, NPCI and from a spokesperson for PineLabs . Originally published on December 4, 2020 at 1:26 pm.

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Reports on banking, payments, fintech and crypto-curencies. Additional reporting on media regulations, data protection and other areas.

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