RBI increases limit for contactless card transactions to Rs 5,000 from January 1

To ensure the adoption of digital payments in a safe and secure manner, the RBI governor today announced that the central bank has proposed to increase the limit for contactless card transactions to Rs 5,000 from Rs 2,000 per transaction. This announcement was part of the RBI's bi-monetary policy announcement held on December 4, 2020.

"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 Rs 2,000 to Rs 5,000 from January 1, 2021," as per Shaktikanta Das's statement.

According to the RBI's Statement on Developmental and Regulatory Policies: Contactless card transactions and e-mandates on cards (and UPI) for recurring transactions have enhanced customer convenience in general while benefitting from increased use of technology. These are also well-suited to make payments in a safe and secure manner, especially during the current pandemic. The recent instructions on disablement of contactless feature on cards and empowering customers to control the limits on their cards have also brought in added safety for users. To further 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 Rs 2,000 to Rs 5,000 from January 1, 2021. Operational instructions will be issued separately.

It was also announced that the RTGS system will soon be made 24x7. "With this enablement, it is proposed to reduce settlement and default risk in the system by facilitating settlement of AePS, IMPS, NETC, NFS, RuPay, UPI transactions on all days of the week."

What is a contactless card?
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."

Steps taken to increase security
Back in January 2020, to increase security of card (credit and debit) transactions the Reserve Bank of India had directed all banks to give card users the facility to themselves enable/disable their cards for different types of use--online, physical, contact-less domestically or internationally.

Card issuers were asked to allow card holders to modify transaction limits within the overall card limit for all types of transactions -domestic and international at PoS, ATMs, online transactions and contactless transactions. Click here to read the full story