RBI hikes contactless card transaction limit to Rs 5000 to boost e-payments

The RBI has said the limit can be further enhanced at the discretion of the customer.
In a move that could boost the adoption of digital payments, 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. The same has been done for e-mandates for recurring transactions through cards and the Unified Payment Interface (UPI).


According to the RBI, “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 pandemic”. Contactless card payments are done without punching in the PIN, which makes it a safe mode of transaction in the current circumstances.


T R Ramachandran, group country manager, India & South Asia, Visa, said: “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”.


Experts said it is a step in the right direction by the RBI and people have been asking it to enhance the limit. There should be an increase in the number of such transactions after the latest move, they said.


The RBI has said the limit can be further enhanced at the discretion of the customer.


Mihir Gandhi, Partner & Leader - Payments Transformation, PwC, said: “Now people do not want to enter their PIN. So, by increasing the limit, almost 70-80 per cent of the transactions will get covered at a point of sale terminal”.


“Card companies will have to ensure that all their cards are enabled with contactless NFC technology… Much of the cash transactions will now move to card transactions,” he added.

Dilip Asbe, MD & CEO of the National Payments Corporation of India (NPCI) the increased limit would also help to boost the average value of transactions and push the adoption of digital payments.


He said UPI’s AutoPay feature should also get a boost as a result of this.


It will now be able to execute high-ticket recurring payments like utility bills, investments, two-wheeler EMIs, consumer durable EMIs, seamlessly, Asbe said.


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.


 In another significant development, the RBI said it would allow settlement of payment systems (AePS, IMPS, NETC, NFS, RuPay, UPI transactions), operated by authorised payment system operators, on all days. Currently, this is available only on RTGS working days.


RTGS to be round the clock from December 14


The RBI on Friday said real-time gross settlement (RTGS) facility would be available round the clock on all days with effect from December 14. It said RTGS would be available for customer and inter-bank transactions round the clock, except for the interval between ‘end-of-day’ and ‘start-of-day’ processes, timings of which would be duly broadcasted through the RTGS system. Also, the intraday liquidity facility would be made available to facilitate smooth operations and it has to be reversed before the ‘end-of-day’ process begins.


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