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
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.