On Friday, while announcing the monetary policy, the Reserve Bank of India (RBI) governor Shaktikanta Das announced enhanced limits for contactless card payments and e-mandates on cards (and UPI) for recurring transactions to Rs 5,000 from Rs 2,000. To promote the adoption of digital payments in a safe and secure manner, the central bank has proposed to enhance this limit, at the discretion of the user, effective from January 1, 2021.
Naveen Kukreja, CEO & Co-founder of Paisabazaar.com says, “The decision to enhance the upper limit on contactless card payments from Rs 2,000 to Rs 5,000 is progressive and will increase customer convenience, especially in these pandemic times when social distancing and staying contactless is crucial. This should also further boost digital payments, which would help the overall financial ecosystem.”
These digital modes of transactions are well-suited to make payments in a safe and secure manner, especially during the current pandemic. The recent instructions on disablement of the contactless feature on cards and empowering customers to control the limits on their cards have also brought in added safety to users.
How does a contactless card work?
A contactless card is a quick way to pay using debit and credit cards for purchases at retail outlets. The amount is limited to Rs 2,000 at present. From January 2021, the sum allowed will be Rs 5,000. All such credit or debit cards, irrespective of which bank issues them, come with the same limit for contactless transactions. These cards contain a chip and an antenna to identify radio frequency from the terminal. When a customer taps the card against a contactless-enabled terminal (within four centimetres of the card reader), the encrypted card and PIN details get transferred wirelessly from the card to the terminal and the payment gets processed.
It is essential that the shop’s swiping device be enabled with a technology called ‘near-field communication’ to be able to process your card payment. If both are enabled, all transactions under Rs 5,000 (from January 2021) will be completed with just a tap; no PIN is required.
However, if the transaction amount is more than Rs 5,000 (from January 2021) per swipe, the person at the billing counter has to dip it or swipe it and you will be required to enter your card’s PIN.
Sanjeev Moghe, Head of cards and payments, Axis Bank says, “The Customer is secured while using these cards, as the card does not leave your hand while making the payment at the retail outlet. When it’s dipped into the POS machine (for transactions of less than Rs 2,000 at present), your card details and PIN may be captured fraudulently.”
Beware of theft
If contactless cards are stolen, then there’s a good chance your money gets stolen more easily as compared to those cards that require a PIN. All the thief needs to do is swipe your card at a store (for transaction less than Rs 2,000 at present) and the money is deducted; he doesn’t need to enter the PIN or authenticate the identity.
Don’t be careless while using a contactless card. For instance, avoid giving your contactless card to an attendant at a restaurant. The attendant may make multiple transactions without your knowledge, since the PIN is not required.
Arvind Ronta Head of Products – Visa India & South Asia says, “Contactless payments offer a secure and convenient way for consumers to transact swiftly. The cardholders must regularly check the bank account statements, keep bank SMS alerts active and notify banks immediately on unauthorized/ suspicious transactions.”
