Priyanka Sambhav
RBI increased the limit for contactless transaction from Rs 2000 to Rs 5000. The revised limit will come into effect from 1st January 2021. The RBI governor Shaktikanta Das made this announcement during the presentation of credit policy. “In order to expand the adoption of digital payments in a safe and secure manner, it is proposed to enhance, at the discretion of the user, the limits for contactless card transactions and e-mandates for recurring transactions through cards (and UPI) from 2,000 to 5,000 from 1st January 2021,” said RBI Governor Shaktikanta Das.
What is a contactless transaction?
You swipe your debit/credit card, and if the amount of transaction is not more than Rs 2000(till now which will be Rs 5000 w.e.f 1st January 2021), you don’t need your PIN to complete the transaction. POS machine will read the card, and a customer will complete the payment without even having to touch the keypad. The contactless card transaction uses near field communications (NFC) technology to enable payment without swiping the card.
The enhanced contactless transaction limit will be applicable not only on the payments through debit and credit cards but also through prepaid instruments, wallets, and the Unified Payments Interface.
In these pandemic times, when social distancing is the ‘new normal’ – people want to make more and more contactless payments. The step to increase the limit will help in broader adoption of digital payment mode. Contactless payment is safer than handling cash and more safe when you are spared from punching your PIN too, so the no-touch transaction during COVID19 times is a good move.
Apart from raising the limit of the contactless transaction, RBI announced the extension of real-time gross settlement (RTGS)payment timings from 14th December 2020. Earlier RTGS was available only from 7 am to 6 pm during the working days and did not work on 2nd and 4th Saturdays. But now RTGS will be around the clock service and will function 24x7x365. RTGS enables large value transaction of Rs 2 lakh and above. As the name suggests, the fund transfer happens at the very same time.
RBI had made fund transfer system NEFT and IMPS into 24-hour service in December 2019, and now RTGS will be available on all the days too.
In a bid to push India towards a digital payment ecosystem, the apex banking body RBI has taken a slew of steps. The primary purpose is to make a consumer’s life easy, but at the same time, banks will have to work on a robust security system, so people feel that the faceless and contactless money transfers as safe as well.
