Visa and Mastercard along with the Payment Council of India (PCI) have suggested the Reserve Bank of India to relax the limit on contactless transactions through debit and credit cards allowed without PIN to Rs 5,000 from the current Rs 2,000.
The proposed relaxation on ‘tap and go’ payments could make card purchases safer for both the consumers and the merchants in the post-covid era as customers would not have to hand over cards at payment terminals and touch the swipe machine to enter PIN, according to these companies.
The presentation was made by representatives of these companies during a recent virtual meet between the PCI with the regulators, two people aware of the matter told ET. PCI is an industry body with members from all leading digital payment companies.
“The players had argued that a relaxed limit could see increased adoption of contactless payments as they have been established as a safer way to make card payments,” said a person aware of the matter. “Other alternatives were also suggested such as tinkering with the limit to Rs.3000 or a temporary relaxation for six months,” said one of the sources cited above.
Contactless cards make use of Near Field Communication (NFC) technology enabling customers to make transactions at payment terminals enabled with the technology without physically swiping the card.
As per current regulations, customers need not enter PIN for such transactions if the purchase value is less than Rs 2,000.
The low limit has been kept to ensure fraud risk protection for customers. The PIN or Personal Identification Number is the unique password required to establish credentials after a card is swiped at the ATM or Point of Sale (POS) device.
“…Recently, authorities, banks and networks in over 55 countries around the world including Europe, the United Kingdom, Middle East as well as South Asia (viz: Bangladesh) have set higher transaction limits for contactless card payments,” Visa said responding to ET’s mailed query on the matter.
“These enhancements are purely aimed at supporting banks in their efforts to push digital transactions in a post Covid era…Visa continues to support our banking clients…while thoughtfully balancing customer convenience and security around these transactions,” Visa said.
Meanwhile, a Mastercard spokesperson said that contactless payments “are convenient, safe, and secure.” “This move would enable consumers to stay safe by reducing touchpoints while making transactions in the current situation,” the spokesperson said. “Even though consumers are trying to avoid stepping out to buy essentials, being able to make contactless purchases of more than INR 2000 would allow them to step out with confidence and make transactions without any fear.”
Queries sent to the Reserve Bank of India didn’t elicit a response till press time.
The proposal for relaxed regulation is likely to undergo scrutiny from the central bank as they believe that the second factor authentication is central to the current security architecture, another source with knowledge told ET.
“The current adoption rate of contactless is still low – in single digits – in the country. Relaxing the norms could pose a security concern,” the person cited above said. “The regulators also inquired about all security features on EMV cards and deployment rates of NFC enabled swipe machines in the meeting.”
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