Reserve Bank of India (RBI) has relaxed the additional second factor of authentication for small transactions up to Rs 2000 in contact less cards. Any transaction over that amount will require PIN authentication across all merchant categories. The move is considered to be a huge push for the NFC payments in India.
The decision was made by the RBI after receiving numerous requests for waiver of the additional factor of authentication (AFA). The regulatory authority had sought public comments on relaxation in AFA in case of small value card present transactions using Near Field Communication (NFC) contactless technology and had made the changes accordingly. The limit of Rs 2000 has been set all categories of merchants were contact less payments will be accepted. 'Tap and pay' refers to the use of near field communication technology in payment cards where instead of the traditional swiping of the card and punching in payment details, users just have to wave the card in front of an acceptance device. RBI's announcement comes on the day that State Bank of India announced the largest roll-out of contactless card payments in the country.
"After examining the trade-off between security and convenience in card transactions, RBI had placed for public comments a draft circular outlining the relaxation in the need for additional factor authentication (AFA) in case of small value card present transactions using Near Field Communication (NFC) contactless technology subject to adherence to EMV standards. Accordingly, it has been decided to relax the extant instructions relating to the need for AFA requirements for small value card present transactions only using contact-less cards," says RBI, and added, "relaxation for AFA requirement is permitted for transactions for a maximum value of Rs. 2,000 per transaction. Beyond this transaction limit, the card has to be processed as a contact payment and authentication with PIN (AFA) will be mandatory."
Since these cards will continue to have Chips, customers will be able to use the cards as a regular chip card and authenticate the transaction with a PIN. "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," RBI added. The new rules will not be applicable to ATM transactions as well as Card Not Present transactions (CNP) irrespective of transaction value.
"This is a great news from RBI, supporting Tap & Pay initiative in a big way, and this will enable us to move towards cashless payments, as more than 90% of the transactions in this country are happening in Cash. I am very positive that India will lead with lots of innovations in Tap & Pay, including innovations in security. Also, its the right time for all the ecosystem partners to come together to boost Tap & Pay," says Mr.Soma Sundaram, CEO and Founder, iKaaz Softwares.