Contactless card payment gaining ground in India

Contactless card payment gaining ground in India

A contactless card from State Bank of India. DH Photo

When chips were introduced in debit and credit cards, it was a big safety upgrade over paying by swiping the magnetic strip. Now, contactless payment is slowly beginning to gain popularity and it takes security and ease of payment to the next level.

Smartphones with near field communication (NFC) are also increasingly being used for contactless payments.

Ease of payment is because the contactless card need not be inserted in the slot of the point of sale (PoS) terminal devices. In PoS devices that have contactless payment facility, all the customer needs to do is take the card/ smartphone near the reading device and the payment is done. The whole payment process takes about three seconds. The Reserve Bank of India has ruled that for transactions below Rs 2,000, no PIN has to be entered.

Contactless cards are considered as safe as chip cards since there are several layers of security that keep the customer protected from fraud. Additionally, the contactless payment device can process only one transaction at a time.

More importantly, the card does not have to be given to the merchant and the customer has complete control of the card.

Doubts were raised if a thief could steal from your card using a card reader or PoS device. But in contactless payment technology, the card/ smartphone and reading device should be about two inches away from each other at the most. So,how do these cards work?

Contactless debit and credit cards are embedded with a chip that produces radio waves. These waves then connect with the reader device at the point of sale and the transaction is completed. This is based on the radio frequency identification (RFID) technology.

Such contactless payments can also be made through Samsung Pay, Google Pay or Apple Pay using smartphones. This is based on NFC technology, which uses radio communication between the smartphone and PoS device to complete the transaction. For this kind of payment, the NFC option has to be switched on. The smartphone then has to be taken near the PoS device and the transaction is made.

There have been reports that in markets like Australia, New Zealand, Singapore and Taiwan, almost half the number of payments are made using contactless technology.

The concept of contactless payments is yet to catch up in India. The concept is on the rise and more merchants are taking up contactless payment devices in their stores. Banks have also been issuing replacement debit and credit cards with contactless payment features to their customers. Major banks are also putting up list of stores that accept payment through the contactless method.

As the technology is still at the nascent stage in India, one cannot really be sure of security. However, going by the way the technology works and the encryption, it should be pretty safe to use.