Visa And Mastercard Urge RBI Nod On Relaxation On ‘Tap-And-Go’ Contactless Payment Limit

American financial services, Visa and Mastercard, along with the Payment Council of India (PCI), have sought the Reserve Bank of India’s nod on relaxation on ‘tap-and-go’ contactless payment limit through debit and credit cards allowed without a PIN from current Rs 2000 to Rs 5000. 

Currently, a person can make contactless payments worth Rs 2000 through the ‘tap-and-go’ feature, any transaction above that would require a PIN number. In the wake of Covid-19, financial services want the limit to be relaxed to Rs 5,000. This relaxation would make card payments safer for both the customers and the merchants. It would eliminate the requirement of handing over cards at payment terminals and avoid touching the swipe machine to enter the PIN for a larger base of transactions.

The presentation was made by the representatives of Visa and Mastercard, during PCI’s recent interaction with digital payments regulators. PCI is an industry body with members from all leading digital payment companies.  

Contactless cards make payments through the use of Near Field Communication (NFC) technology enabling customers to make transactions at payment terminals enabled with the technology without physically swiping the card. 

The low limit is Rs 2000 as per current regulations 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 sale which is above the maximum amount is made, then the card is swiped at the ATM or Point of Sale (POS) device.

Specifying that contactless payments are convenient, safe and secure, a Mastercard spokesperson said, “this move would enable consumers to stay safe by reducing touch points while making transactions in the current situation.” 

He also said that “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.”

The proposal seeking 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 a news daily. 

Last month, the RBI had given green signal for Visa, Mastercard and the National Corporation of India (NCPI) to allow tap-and-go functionality on card payments for all purchases at retail stores and shopping centres to allow the customers to make payments without having to swipe their card, even for purchases above Rs 2K. 

However, the financial service providers had to activate a two-factor authentication process, which required PIN number, for transactions above the maximum limit. An official aware of the matter highlighted that it now depends on banks and payment participants to bring about a change in the payment infrastructure. 

The official had also clarified that the changes required are 'not too complicated'. “The card issuers, merchant acquirers, and consumers need to be ready. It should be a matter of three months if all goes well,” they added. 

Both financial services Visa and Mastercard have launched contactless payment functionalities into their payment systems since last year. Visa had launched ‘ tap-and-go’ contactless card payments in February last year, whereas Mastercard had launched this feature in December 2019. Meanwhile, India-based Paytm Payment Bank had also launched a similar contactless payments solution, in April 2018.