The Reserve Bank has today released the final circular on the relaxation in requirement of additional factor of authentication (AFA) for small value card present transactions for values up to ₹ 2,000/- per transaction across all merchant categories. This is in line with the Reserve Bank’s approach to enhance customer convenience while ensuring security in card based transactions.

Banks have been advised to put in place suitable velocity checks (i.e., how many such small value transactions will be allowed in a day / week / month) as considered appropriate.

Banks have also been advised to create awareness among customers about the use of contactless cards, its acceptability, the risks and liability, if any devolving on the customers, at the time of issuance of such cards.

Customers may look for the “contactless” logo on the card as well as at the merchant location so that they can distinguish such cards from other cards available with them and also identify the locations where contactless payments are accepted.

As these cards will continue to be chip cards, customers may use them, irrespective of value, as a regular chip card and authenticate the transaction with a PIN as hitherto. If the customer, however, chooses to use the card for contactless payments, then PIN authentication may not be necessary for transactions up to ₹ 2,000/-.

To ensure inter-operability and facilitate acceptance of such cards across all existing card acceptance infrastructure that are already Europay, MasterCard and Visa (EMV) compliant based on the existing instructions, this relaxation has been made applicable to only card present transactions using contactless cards (NFC-based) adhering to EMV standards. This will also ensure the usability of such contactless cards as regular chip card with PIN authentication, if the customer so desires.

Bank will examine the possibility of other types of contactless payment solutions using other form factors like mobile and issue instructions, if required.

It may be recalled that the Bank had placed in its website the draft circular on “Relaxation in requirement of Additional Factor of Authentication for small value card present transactions” on March 13, 2015 for public comments till April 04, 2015. This relaxation was considered taking into account the requests received from various segments indicating the need to foster innovative payment products as also enhance the convenience factor in certain types of card uses.

Ajit Prasad
Assistant General Manager

Press Release : 2014-2015/2407