With the increasing demand for making electronic payments easier, the
Reserve Bank said on Friday it is willing to relax the norms only for
'card present' transactions where near-field communication (NFC)
technology is used.
It said the ATM transactions where the card is
not present will continue to require the additional factor of
authentication, a PIN or one-time password.
"It has been decided
to relax the extant instructions relating to the need for additional
factor of authentication requirements for small value card present
transactions only using contact-less card payments using NFC," it said
in the draft circular late Friday evening.
The regulator has set a limit of Rs. 2,000 per transaction even for contact-less cards.
The RBI said it has arrived at this conclusion after examining the trade-off between security and convenience.
The
two-factor authentication issue came to light after the RBI discovered
that the US-based tax aggregator Uber was circumventing this norm. This
led to the central bank last August asking the American company to
comply with its norms by last October or else shut shop. Uber fell in
line and complied with the norms.
(Also see: Two-Factor Authentication Is a Bother - Can It Get Better?)
At present, a customer has to
key-in the personal identification number (PIN) for authenticating every
transaction. If the draft circular gets implemented, customers using
contactless cards will not have to key in the PIN for transaction up to
Rs. 2,000.
The RBI has advised banks to explain to customers the
NFC technology, its use, risks and also the maximum liability devolving
on the customer, and also to put in place a robust mechanism to report
of loss or stealing of cards.
At present, only ICICI Bank has a
contactless card offering, while industry sources say the largest lender
SBI is also mulling to launch such a card.
It can be noted that
the e-commerce firms have been pitching for doing away with the
two-factor authentication for small value transactions, and some like
Snapdeal had also requested for the cap to be set at Rs. 3,000.
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