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Contactless card limit raised to ₹5,000 without AFA

Current · Source: Reserve Bank of India · RBI/2020-21/71 · issued 04 Dec 2020 · ~2 min read

Quick answerRBI has increased the per-transaction limit for contactless card payments without Additional Factor of Authentication from ₹2,000 to ₹5,000, effective January 1, 2021, to promote safer, touch-free payments during COVID-19.

The rule, in the simplest words

From January 1, 2021, you can tap your card to pay up to ₹5,000 without entering a PIN or OTP (one-time password sent to your phone).
Before this rule, the limit was ₹2,000; now it is raised to ₹5,000 to make paying faster and safer during COVID-19.
You can still choose to use your card by inserting it or by tapping, and you can set your own lower limit or turn off tap-to-pay completely.
Banks and shops must update their payment machines to accept tap payments up to ₹5,000 without extra security checks.

How it plays out — a real example

Priya, a branch operations officer in Indore, updates her bank's PoS terminals at local jewelry stores so customers can tap their cards for gold coin purchases up to ₹5,000 without entering a PIN. She also prints a simple flyer explaining the new limit and reminds customers they can still set a lower tap limit if they prefer.

What changed

The per-transaction limit for contactless card transactions at PoS terminals without AFA has been raised from ₹2,000 to ₹5,000. This change, announced on December 4, 2020, takes effect from January 1, 2021. Cardholders retain the option to use contact or contactless mode and can set their own limits as per earlier instructions.

What it means for you

Banks and card networks can now process contactless transactions up to ₹5,000 without requiring AFA, reducing friction at checkout. This encourages higher-value contactless usage, especially in retail and quick-service environments. However, the existing security features—like cardholder control over contactless settings—remain unchanged, so no compromise on safety.

What you must do

Update PoS terminal configurations to accept contactless transactions up to ₹5,000 without AFA from January 1, 2021.
Communicate the new limit to merchant partners and ensure their terminals are compliant.
Review and update internal policies, customer FAQs, and staff training materials to reflect the revised limit.
Remind cardholders that they can still set lower limits or disable contactless mode as per their preference.

Who it affects

All scheduled commercial banks including RRBs, UCBs, SCBs, DCCBs, payments banks, small finance banks, local area banks, Non-bank prepaid payment instrument issuers, Authorised card payment networks, Merchants with PoS terminals

❓ Common questions

Regulatory timeline

Stated effective date effective January 1, 2021
Decoded by BankPulse 2026-06-18 08:50 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this change apply to online card transactions?

No, this relaxation is specifically for card transactions in contactless mode at physical Point of Sale (PoS) terminals only.

Can a customer still choose to use AFA for contactless transactions under ₹5,000?

Yes, cardholders have the discretion to use contactless or contact mode, and can set their own limits or disable contactless features as per the January 2020 circular.

When does this new limit become effective?

The increased limit of ₹5,000 per transaction comes into effect from January 1, 2021.

📜 Read the original circular — full text as issued by RBI

RBI/2020-21/71
 DPSS.CO.PD No.752/02.14.003/2020-21
 December 04, 2020
 The Chairman / Managing Director / Chief Executive Officer
 All Scheduled Commercial Banks including Regional Rural Banks /
 Urban Co-operative Banks / State Co-operative Banks /
 District Central Co-operative Banks / Payments Banks /
 Small Finance Banks / Local Area Banks /
 Non-bank Prepaid Payment Instrument issuers /
 Authorised Card Payment Networks
 Madam / Dear Sir,
 Card transactions in Contactless mode - Relaxation in requirement of Additional Factor of Authentication
 Please refer to circular DPSS.CO.PD.No.2163/02.14.003/2014-2015 dated May 14, 2015 issued by Reserve Bank of India (RBI), wherein Additional Factor of Authentication (AFA) requirement was relaxed for values up to ₹ 2,000/- per transaction for card transactions in contactless mode at Points of Sale (PoS) terminals. Subsequently, it was clarified that transactions beyond this limit can be processed in contactless mode, but with AFA.
 2. Reference is also drawn to RBI circular DPSS.CO.PD No.1343/02.14.003/2019-20 dated January 15, 2020 on “Enhancing Security of Card Transactions”, wherein users were provided option of switch on / off or to set limits for various card features, including for contactless transactions. The instructions, which came into effect from October 1, 2020, have made card transactions more secure by empowering users to enable card features and set requirements according to their need and comfort.
 3. The present COVID-19 pandemic has underlined the benefits of contactless transactions. Keeping this in view and based on stakeholder feedback, it was announced in the Statement on Developmental and Regulatory Policies dated December 4, 2020 that per transaction limit for AFA relaxation for contactless card transactions will be increased. Accordingly, given the sufficient protection available to users, it has been decided to increase the per transaction limit to ₹ 5,000/-. All other requirements, including the discretion of cardholder to use contactless or contact mode of transaction, shall continue to remain applicable, as hitherto.
 4. This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect from January 1, 2021.
 Yours faithfully,
 (P. Vasudevan)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2020-21/71 · issued 04 Dec 2020. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks including RRBs, UCBs, SCBs, DCCBs, payments banks, small finance banks, local area banks, Non-bank prepaid payment instrument issuers, Authorised card payment networks, Merchants with PoS terminals), your first concrete step on “Contactless card limit raised to ₹5,000 without AFA” is: “Update PoS terminal configurations to accept contactless transactions up to ₹5,000 without AFA from January 1, 2021.” (RBI issued this 04 Dec 2020).

Circular: RBI/2020-21/71 -- Contactless card limit raised to ₹5,000 without AFA
Issued: 04 Dec 2020
Action required: Update PoS terminal configurations to accept contactless transactions up to ₹5,000 without AFA from January 1, 2021.
Action required: Communicate the new limit to merchant partners and ensure their terminals are compliant.
Action required: Review and update internal policies, customer FAQs, and staff training materials to reflect the revised limit.
Action required: Remind cardholders that they can still set lower limits or disable contactless mode as per their preference.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11999&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.