The Reserve Bank of India has proposed to ease the authentication process for buying products up to ₹2,000 using contact-less cards based on Near Field Communication (NFC) technology.
NFC cards enable users to make payment by just waving or touching the card on a terminal kept at the merchant. Unlike credit and debit cards there is no need for a swipe. These card are quite popular in the US and Japan. In India only a few banks like ICICI Bank have launched it. Since the cards come with an in-built security chip there is no need for additional authentication.
The RBI on Friday said banks can relax additional factor of authentication (AFA) requirement for transactions for a maximum value of ₹2,000 per transaction in the case of contact-less chip cards that adhere to the so-called Europay-MasterCard-Visa standards.
However, banks are free to set lower per transaction limits. For transaction value above the threshold limit of ₹2,000, Personal Identification Number will be mandatory.
As per the draft circular, banks have to put in place suitable velocity checks (daily, monthly, etc) as agreed upon by the customer. The relaxation will not apply to ATM transactions irrespective of transaction value and Card not Present transactions (CNP). CNP transactions are those transactions where the cardholder does not physically present the card to a merchant at the time of placing the order, such as e-commerce transactions.
In the interest of customer protection, the banks have also been advised to clearly explain to customers about the Near Field Communication (NFC) technology. Banks have to clearly indicate the maximum liability devolving on the customer, if any, at the time of issuance of such cards, along with the responsibility of the customer to report the loss of such cards to the bank immediately through multiple channels made available by the bank.