**Summary:**
This Reserve Bank of India (RBI) circular, DPSS.CO.PD No.7520/02.14.003/2020-21, dated December 04, 2020, addresses the relaxation of Additional Factor of Authentication (AFA) requirements for card transactions in contactless mode. It amends the previous circular DPSS.CO.PD.No.2163/02.14.003/2014-2015 dated May 14, 2015. In light of the COVID-19 pandemic and stakeholder feedback, the RBI has decided to increase the per-transaction limit for AFA relaxation from ₹2,000 to ₹5,000 for contactless card transactions at Points of Sale (PoS) terminals. This revision is based on the enhanced security measures already in place, including user options to switch on/off or set limits for contactless transaction features, as per circular DPSS.CO.PD No.1343/02.14.003/2019-20 dated January 15, 2020. All other existing requirements, including the cardholder's discretion to use contactless or contact mode, remain applicable. This directive, issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), will take effect from January 1, 2021. For further information, contact P. Vasudevan, Chief General Manager, Department of Payment and Settlement Systems, Central Office, Reserve Bank of India, 14th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai – 400001. Tel: 91-22-2264 4995; Fax: 91-22-22691557; email: cgmdpsscorbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system and monetary policy.
Scheduled Commercial Banks: Banks in India that are listed in the Second Schedule to the Reserve Bank of India Act, 1934.
Regional Rural Banks: Government-sponsored regional banks in India focused on providing credit and banking services to rural areas.
Urban Cooperative Banks: Primary cooperative banks located in urban and semi-urban areas in India.
State Cooperative Banks: Apex cooperative banks at the state level in India.
District Central Cooperative Banks: Cooperative banks operating at the district level in India.
Payments Banks: A type of bank in India that can accept deposits, offer payments and remittance services, but cannot lend money.
Payment and Settlement Systems Act, 2007: An act of the Indian Parliament that provides for the regulation and supervision of payment systems in India.
भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2020-21/71
DPSS.CO.PD No.752/02.14.003/2020-21 December 04, 2020
The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks including Regional Rural Banks /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks / Payments Banks /
Small Finance Banks / Local Area Banks /
Non-bank Prepaid Payment Instrument issuers /
Authorised Card Payment Networks
Madam / Dear Sir,
Card transactions in Contactless mode - Relaxation in requirement of Additional Factor of
Authentication
Please refer to circular DPSS.CO.PD.No.2163/02.14.003/2014-2015 dated May 14, 2015 issued
by Reserve Bank of India (RBI), wherein Additional Factor of Authentication (AFA) requirement
was relaxed for values up to ₹ 2,000/- per transaction for card transactions in contactless mode at
Points of Sale (PoS) terminals. Subsequently, it was clarified that transactions beyond this limit
can be processed in contactless mode, but with AFA.
2. Reference is also drawn to RBI circular DPSS.CO.PD No.1343/02.14.003/2019-20 dated
January 15, 2020 on “Enhancing Security of Card Transactions”, wherein users were provided
option of switch on / off or to set limits for various card features, including for contactless
transactions. The instructions, which came into effect from October 1, 2020, have made card
transactions more secure by empowering users to enable card features and set requirements
according to their need and comfort.
3. The present COVID-19 pandemic has underlined the benefits of contactless transactions.
Keeping this in view and based on stakeholder feedback, it was announced in the Statement on
Developmental and Regulatory Policies dated December 4, 2020 that per transaction limit for AFA
भुगतान और िनपटान �णाली िवभाग, क��ीय कायार्लय, 14वीमंिजल, क��ीयकायार्लयभवन,शहीदभगत�संहमागर्, फोट,र् मुम्बई - 400001
फोनTel: (91-22) 2264 4995; फैक् सFax: (91-22) 22691557; ई-मेलe-mail : cgmdpssco@rbi.org.in
Department of Payment and Settlement Systems, Central Office, 14th Floor, Central Office Building, Shahid Bhagat Singh Road, Fort, Mumbai - 400001
�हदं ी आसान ह,ै इसका �योग बढ़ाइएrelaxation for contactless card transactions will be increased. Accordingly, given the sufficient
protection available to users, it has been decided to increase the per transaction limit to ₹ 5,000/-.
All other requirements, including the discretion of cardholder to use contactless or contact mode
of transaction, shall continue to remain applicable, as hitherto.
4. This directive is issued under Section 10 (2) read with Section 18 of Payment and
Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect from January 1, 2021.
Yours faithfully,
(P. Vasudevan)
Chief General Manager