RBI increases limit for contactless cards: What it means for you?

RBI increases limit for contactless cards: What it means for you?

Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced that the central bank has enhanced the limit for contactless card payments from Rs 2,000 to Rs 5,000 per transaction. The enhanced limit will be effective from January 1, 2021 and it will be at the discretion of the card user.

The announcement was made by Das during his statement RBI’s bi-monthly policy review. The move has been welcomed by industry experts who feel that increasing the contactless card limit will help users make payments in a safe and secure manner during the ongoing coronavirus pandemic.

“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,” said Shaktikanta Das.

The RBI in a separate statement said, “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 2,000 to 5,000 from January 1, 2021. Operational instructions will be issued separately,” the statement added.

What are contactless cards and how to use them?

Contactless cards (debit or credit) have an additional function which allows users to make payment to a vendor or shopkeeper without any physical contact. These cards use Near Field Communications (NFC) technology, enabling customers to make payment at payment terminals without swiping it. Just placing it over the card reading machine will complete the transaction. There is no need to enter the pin. The limit on such transactions is currently capped at Rs 2,000.

24×7 RTGS payments from December 14

The RBI governor also spoke about the availability of 24×7 RTGS system. “The RTGS system will soon be made 24×7. 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. This will make the payments ecosystem more efficient,” he said.

A statement on RBI’s website suggests that round-the-clock RTGS system will be made available with effect from December 14, 2020.

“A reference is invited to the Statement on Developmental and Regulatory Policies dated October 09, 2020 wherein Reserve Bank of India (RBI) had announced making available the Real Time Gross Settlement (RTGS) system round the clock on all days. Accordingly, it has been decided to make RTGS available round the clock on all days of the year with effect from 00:30 hours on December 14, 2020,” said RBI in its statement.

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