In a bid to boost spending, the RBI has increased the limit for contactless transactions from Rs. 2o00 to Rs. 5000, beginning January.
The decision to this effect has been announced in the December's bi-monthly RBI monetary policy meet.
"In order to expand the adoption of digital payments in a safe and secure manner, it is proposed to enhance, at the discretion of the user, the limits for contactless card transactions and e-mandates for recurring transactions through cards (and UPI) from Rs 2,000 to Rs 5,000 from January 1, 2021," as per Shaktikanta Das's statement.
What is a contactless card?
In such cards, the card is read by placing the card near the card reader. These cards with NFC technology are by far safer in comparison to magnetic stripe cards which are largely struck down by the system.
Further new security layer has been provided which customers can themselves enable basis their use i.e. enable or disable their cards for different transactions.