RBI relaxes second factor authentication for contactless cards upto Rs 2,000

Beyond this transaction limit, the card has to be processed as a contact payment and authentication with PIN will be mandatory

Reserve Bank of India (RBI) today relaxed the additional second factor of authentication for small value card present transactions. RBI said that this additional authentication would not be required for up to Rs 2,000 per transaction for small value card present transactions only using contact-less cards.

The banking regulator has said that it has received requests for waiver of requirement of the additional factor of authentication (AFA) to foster innovative payment products as also enhance the convenience factor in certain types of card transactions. It said that the limit of Rs 2,000 per transaction will be the limit set across all categories of merchants in the country where such contactless payments will be accepted.

Beyond this transaction limit, the card has to be processed as a contact payment and authentication with PIN (AFA) will be mandatory. Even for transaction values below this limit, the customer may choose to make payment as a contact payment, which has to be facilitated by both issuing and acquiring banks. In other words, customers cannot be compelled to do a contactless payment.

RBI said that banks allow customers to set lower per-transaction limits than Rs 2,000 per transaction. However, RBI said that banks should explain and risks while issuing such contact less cards to customers.

These rules will not be applicable to ATM transactions irrespective of transaction value and Card Not Present transactions (CNP).