What is your default digital payment option?

“Considering that most of the transactions are below ₹1,000, the new limit is generous. It ensures that customers have a frictionless payment experience where they don’t have to enter passwords and PINs (personal identification numbers),” said Nitya Sharma, co-founder and chief executive officer, Simpl, a platform focussed on pay later service.

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RBI has a monetary limit for contactless payment as it does not require the cardholder to punch in any password or PIN. The regulator has made it mandatory for all transactions above ₹2,000 ( ₹5,000 from 1 January) to be authenticated twice. When an individual is using a card for any transaction above ₹2,000, besides keying the card details, the issuer authenticates the transaction through another means such as by sending an OTP (one-time password). The extra security layer is used to curb frauds and make electronic transactions more secure.

Besides cards, there are already different options for contactless payment. Some of these include the UPI (Unified Payment Interface), payment wallets and IMPS (Immediate Payment Service) through mobile banking apps. Each of these modes of payment has its merits and demerits. Let’s look at which one works best for contactless transfer of money.

CARDS

At the beginning of the year, RBI had issued a notification in which it had outlined steps that every issuer must take to make all types cards more secure. According to the notification, when banks are either issuing or re-issuing cards, by default, the customer should only be able to use them at domestic ATMs and contact-based payment at point of sale (PoS) terminals.

For all other transactions—such as for online transaction in India or abroad or for contactless payment—customers must call up the issuer and ask them to enable the card for specific use.

For existing cards, RBI asked issuers to use their discretion. But cards that were never used for online, international, or contactless transactions, had to be mandatorily disabled for such transactions. Banks had to implement this from 1 October.

If an individual wants to use his card for contactless…