RBI Removes Additional Factor of Authentication for Transactions up to Rs 2000

Reserve Bank of India has finally removed the Additional Factor for Authentication (AFA) for any transaction up to Rs 2000. It means that PIN authentication is not required for transaction up to Rs 2000. RBI announced this new circular for NFC (Near Field Communication) payment mode, it said, “If the customer, however, chooses to use the card for contactless payments, then PIN authentication may not be necessary for transactions up to Rs 2,000.”

As per RBI norms, NFC based Contact Less Payment can only be made for a transaction up to Rs 2000, beyond that, a merchant is mandated to process contact payment and authentication with PIN (AFA) will be mandatory. Suitable velocity checks may be put in place for considering how many such small value transactions will be allowed in a day / week / month.

All contactless cards should be chip enabled, adhering to global EMV payment standard, so that equality is maintained across all platforms, everywhere in India. The relaxation shall not be apply when ATM transactions and payments where cards are not present.

Further, in the interest of customer awareness and protection the bank are also advised to place of a logo or symbol indicating that below Rs 2000 transactions can be made using contactless card payments, without entering any PIN. Banks are mandated to clearly indicate that in case contactless cards are lost, then any loss of funds or misuse of funds will be directly customers responsibility.

Among private bank players, ICICI was the first to launch such contact less cards in three cities – Gurgaon, Hyderabad and Mumbai in January this year with plans to extend it to other cities in the future. SBI has also started distributing contactless NFC based credit and debit cards. Now, RBI moderated norms, it seems more banks to come up with NFC based payments systems.

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  • Kaushik Barai

    A good initiatives but the amount of Rs.2000/- is very much on lower side. With amount restriction of Rs.2000/- the transaction should not be restricted to NFC cards only. Some Banks have already implemented Card Fraud Risk Management Tools and effectively monitoring the CARD usage of their customers, The limit of Rs.2000/- may be increased for such banks.