RBI Removes Mandatory 2-Factor Authentication For Low-Value Contactless PaymentsMay 15, 2015 2015-05-15 11:59
RBI Removes Mandatory 2-Factor Authentication For Low-Value Contactless Payments
The Reserve Bank of India has relaxed the requirement of additional factor of authentication (AFA) for transactions of up to Rs 2,000 using cards embedded with NFC chips.
The move is in line with requests received to waiver the requirement for 2-factor authentication in order to foster new payment technologies and enhance consumer convenience in the country.
RBI has earlier circulated a draft regarding the same in order to gather feedback and has now implemented the change with certain guidelines for banks offering the service to their customers.
The transaction limit has been set at Rs 2,000 across merchant categories in the country, however, banks will have the leeway to reduce that limit further if seen necessary.
The RBI has also advised banks to put in place necessary velocity checks, ie. how many such small value transactions can be made with requiring AFA per day/week/month.
While RBI’s move to waiver AFA on small value transactions, some see it as a threat to the numerous digital wallet-based payment companies that have propped up.
Paytm, which is among the largest among them, said that customers don’t flock to its platform just because of the ease of making payments, but because of the overall value they offer while making purchases.
The company has transitioned itself into an e-commerce platform which is supported by its e-wallet, offering users great cashback deals on purchases, with the amount being credited back into their Paytm wallets.
Even the government is supporting cashless payments as it looks to curb the epidemic of black money laundering in the country, and e-wallets and digital payments do seem to be the perfect solution to that.
Contactless payments, digital wallets, and other forms of cashless payments are still at a very nascent stage in India, where a massive chunk of the population doesn’t yet hold bank accounts.