RBI increased the limit for contactless card transactions to Rs 5,000 from 1st January 2021

The Reserve Bank of India, to make certain the adoption of digital payments in a safe and secure manner, had announced that the central bank has proposed in order to increase the limit for contactless card transactions to Rs 5,000 from Rs 2,000 each transaction from 1st January 2021. This announcement was a part of the Reserve Bank of India’s bi-monetary policy announcement that was held on 4th December 2020.

Also, the same was done for e-mandates for recurring transactions through cards as well as the Unified Payment Interface (UPI).

As per the Reserve Bank of India, contactless card transactions and e-mandates on cards (and UPI) for recurring transactions had improved the customer convenience, all together, while benefitting from augmented usage of technology. These are more suitable at the current pandemic time to make payments in a safe and secure manner. Contactless card payments are completed without any punching in the PIN, which makes it a safer style of transaction in the present circumstances.

The Reserve Bank of India had stated the limit could be further enhanced at the discretion of the users.

Now the card companies need to make certain that all their cards are enabled with contactless technology to successfully move the cash transactions to card transactions. The increased limit shall also help to increase the average value of transactions and push the acceptance of digital payments. This move shall also boost the UPI’s AutoPay feature.

For creating an enhanced setting for users to use digital payment products in a fairly safe and secure manner, the Reserve Bank of India stated that it is planning to follow a uniform security framework for digital payment mediums in the nation through the digital payment security controls directions.

The Reserve Bank of India also held that it had proposed to issue the Reserve Bank of India (Digital Payment Security Controls) Directions, 2020, for regulated entities towards setting up a strong governance structure for such systems as well as execute common minimum standards of security controls for mediums like internet, mobile banking, and card payments, amongst others.

In an additional significant development, the Reserve Bank of India also held that it would permit settlement of payment systems (AePS, IMPS, NETC, NFS, RuPay, UPI transactions), run by authorized payment system operators, every day. Presently, this is available only on the RTGS working days.

Also, the RTGS is going to be round the clock from 14th December 2020.

The Reserve Bank of India stated that the facility of the real-time gross settlement (RTGS) shall be available every day from 14th December 2020. The RTGS shall be available for users and inter-bank transactions except for the interval between ‘end-of-day’ and ‘start-of-day’ procedures, timings if which shall be duty broadcasted via the RTGS system. Along with this, the intraday liquidity facility shall also be made available towards facilitating smooth functioning and it needs to be reversed before the end of day procedure begins.

Conclusion

Thus, it could be said that currently, there is a strong customer preference for digital payments and the new improved limits for e-mandates as well as contactless cards, which would further help in the transition of millions of Indian customers from cash towards fast, convenient, and safe forms of digital payments.

Author:

eStartIndia Team