Contactless card purchases to be easier

You will soon be able to make transactions up to Rs 2,000 from credit/debit card without having to provide the card's personal identification number.
Team Money Today        Print Edition: April 2015
Contactless card purchases to be easier
(Photo for representation purposes only; Souce: Reuters)

You will soon be able to make transactions up to Rs 2,000 from credit/debit card without having to provide the card's personal identification number. The Reserve Bank of India (RBI) has came out with draft guidelines seeking removal of second-level authentication for such transactions.

This will only be applicable in case of contactless cards (cards which have a smart chip and uses radio frequency identification for payment) which use Near Field Communication (NFC) technology. Under this technology one is not required to swipe the card but has to touch the card with the payment machine.

According to an RBI statement, it have been receiving requests from customers and entities in certain niche segments indicating the need to foster innovative payment products/processes and for enhancing convenience in certain cases/type of transactions without the need for having the mandatory additional factor of authentication (AFA).

"This will help promote NFC and is a good testing environment to see how small transactions can be accepted without PIN. This is a precursor to other card transactions being allowed without PIN," says Siddharth Arora, CEO and Co-founder of ePaisa, a mobile payment ecosystem.

The relaxation will only be available to contactless cards which fulfil the EMV (Europay, MasterCard and Visa) standards. This relaxation will not be available for card not-present transactions. Simply put, the card holder has to be physically present while doing the transaction.

In case of transactions above Rs 2,000, it will be mandatory to have AFA. Under AFA, a one-time PIN is required to complete the transaction. These relaxations will not be applicable for ATM transactions as well irrespective of the transaction value.

The number of intervals (daily, weekly, monthly) at which these transactions could happen per card will be decided by the bank after consulting the customer. Also, banks will have the liberty to set a lower limit.

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