RBI allows transactions upto Rs 2000 without second factor authentication

MUMBAI: In a move that will promote ‘ tap and pay’ electronic payments, the Reserve Bank of India ( RBI) said that bank can allow customers to transact with contactless card upto Rs 2000 without customers punching a separate PIN for authentication. The ‘tap and pay’ refers to the use of near-field communication ( NFC) technology, enabling users to make payments by waving or tapping the card near the contactless reader instead of swiping it.

Prior to this relaxation, after tapping the card at a point of sale machines, the customer had to punch their PIN number as an additional factor authentication to avoid any chances of fraud. On Thursday, RBI has said that additional factor authentication is not required upto Rs 2000 per transaction and a customer can now just wave the card before the PoS machines to complete the transaction.

The move will boost electronic transactions at retail outlets and also fasten the payments at toll services. The relaxation comes on the day SBI launched sbiINTOUCH contactless card on 5000 PoS machines.

The RBI has said that banks should give customers a choice to set a limit lower than Rs 2000 per transaction. RBI has said that issuing bank will be responsibility for authorising the contactless payment based on such card-based limits.

The RBI has also asked to ensure that the contactless cards is a chip card adhering to EMV payment standard, so as to be acceptable across the existing card acceptance infrastructure which are EMV compliant.

Among other things, RBI has asked banks to put in place a robust mechanism for seamless reporting of lost or stolen cards, which a customer can be accessed through multiple channels such as website, phone banking and SMS. Also, it has asked banks conduct velocity checks to decide on how many such small value transactions could be allowed in a day or a week or a month.