CONTACTLESS PAYMENT

Subject: Economics

Context: Reserve Bank of India governor announced that RBI has enhanced limits for contactless card payments from ₹2,000 to ₹5,000. This will be effective from 1 January 2021 and will be at the discretion of the user.

Concept:

• The RBI’s decision to increase the limit from Rs. 2000 to Rs. 5000 without entering a PIN on contactless transactions through NFC cards is a welcome as in recent months seen a marked increase in contactless transaction on our network.
• NFC transactions follow safety protocols as specified by RBI and Payment Schemes and cardholders can be assured that their transactions are being conducted in a secure manner.
• Contactless payment refers to methods that allow consumers to pay using debit and credit cards without actually making contact with others. This is done using radio frequency identification (RFID) or near-field communication (NFC) technologies.
• The most common methods include tapping your card on a point of sale (PoS) terminal, but smartphone makers have made NFC-based systems — like Samsung Pay and Apple Pay — which also qualify as contactless payment systems.