Contactless Payment enables users to pay for products and services using their RFID-enabled debit or credit cards. With contactless payment technology, purchases may be made using a chip found in credit or debit cards, tags, keychains, or mobile phones. Radio frequency or Near Field Communication (NFC) protocols are used to communicate between a chip or QR code and a reader device.
As part of a machine-to-machine information transmission, it uses radio frequency identification (RFID). Although it uses the same technology as Easy Pass on the motorway, this version is connected to your bank or payment card account. One of the earliest contactless payment systems in the world was provided by the transit authority of South Korea in Seoul. UPass, which was first introduced in 1995, offers users a fast and simple method to pay for bus rides utilizing the contactless technology. In 1997, Mobil introduced Speedpass, one of the first contactless payment systems that let users pay for petrol at participating gas stations using an unique fob loaded with cash. After London’s transport agency introduced its prepaid contactless Oyster Card system for users to use on the Underground, the contactless technology gained popularity in the UK.
After London’s transport agency introduced its prepaid contactless Oyster Card system for users to use on the Underground, the contactless technology gained popularity in the UK. The organization began letting passengers use contactless credit and debit cards on the public transportation system in 2014.
KEY TAKEAWAYS:
- Using radio frequency identification (RFID) and near-field communication, contactless payment provides a safe and convenient way to make purchases using a debit or credit card, smartcard, or other payment device.
- To utilize the system, a customer must tap their credit or debit card against a point-of-sale terminal that has the technology.
- Contactless payment is seen as a fast and simple method of payment since it does not need users to enter a PIN.
- Contactless payment is popular in Australia, India, Canada, South Korea, and the United Kingdom, but it has yet to gain popularity with American customers.
Contactless payment adoption has been quite gradual in the US market. According to a 2018 study by consulting company A.T. Kearney, contactless payment methods are used in around 20% of transactions in Australia, Canada, South Korea, and the United Kingdom.
It is becoming simpler to complete transactions. Payments may be made easily in a variety of ways. Contactless Payment is one of these techniques.
How Does Contactless Payment Work?
Radio Frequency Identification (RFID) technology is used by cards that enable Contactless Payments. When the card is brought close to a card reader, it interacts with it in order to complete the transaction.
The card-reader verifies the information on the card when it is tapped or waved over it. Then, the Point-of-Sale system of the Merchant communicates the transaction to the card issuer. The card issuer authorizes the transaction after doing an analysis.
Contactless phone payment is also an alternative for those who choose to utilize their phones for transactions.
Contactless phone payment is also an alternative for those who choose to utilize their phones for transactions.
- It’s a secure payment method
People may believe that Contactless Payment is a dangerous way since anybody may take their credit card information. Contactless Payments, on the other hand, are very secure. They are difficult to breach since they are validated payments.The information on the card is encrypted. As a result, conducting illegal logins and stealing card information becomes more difficult.
- It’s a secure payment method
- Ease of use
Contactless payments are faster and reduce checkout lines. Checkout doesn’t need cash handling. No PIN required. - Safer transactions
Tap-to-pay technology is efficient and secure. Encryption and dynamic data protect you against fraudulent transactions.
- The flexibility of payment devices
Cashless means slimmer wallets. NFC-enabled smartphones make payments easy. - Loyalty benefits
Most loyalty programs work with tap-to-pay smartphones. They provide discounts and loyalty points at checkout. Some banks provide rewards and bonuses for contactless payments.
From the Business’s perspective
- Better operational efficiency
Tap-to-pay is quicker and requires less labor. Businesses spend less time running card terminals or counting cash with contactless payments. - Better customer experience
According to studies, businesses that accept contactless payments provide a smoother and faster checkout experience to customers, earning their loyalty. Stores may also increase consumer interactions by optimizing their loyalty programs. - No extra cost
Contactless payment processing is free. Businesses pay the same credit card cost as consumers. - Fraud protection
Encrypted contactless payment technology discourages hacking. Better transaction security means no disputes for businesses. Most banks protect contactless payments from fraud.
Challenges of Contactless Payments
Despite its benefits, contactless payments have drawbacks. Modern technology has successfully addressed these challenges, but let’s review some contactless payment risks.
Concerns for Consumers
- Limited acceptance
Retailers are progressively allowing contactless payments, but customers are unhappy with the patchy availability, particularly at smaller stores. Recent years have seen an upswing. - Low transaction limit
RBI caps contactless payments in India to INR 5000* every transaction. PINs are required for high-value transactions to prevent fraud. Some shoppers may find this regulation limiting. - Technical limitations
Mobile contactless payments have technological obstacles. Tap-to-pay requires an NFC-enabled smartphone. - Limited international availability
Internationally, mobile contactless payments may not operate. Some contactless mobile wallets aren’t accepted internationally despite comparable technology. Foreign transaction fees are possible. - Security concerns
Since contactless cards don’t need a PIN, fraud is a concern if they are lost or stolen. In this instance, notify the issuing bank. Most banks offer 100% fraud protection if you utilize it carefully.
Examples of Contactless Payment Banks and other financial organizations accept contactless payments. However, more businesses have also hopped on board and are now providing their own variations of contactless payment. For instance, in 2011 Google and Android released NFC-compatible payment systems compatible with their smartphones, and in 2014 Apple launched Apple Pay, its own take on the digital wallet.
Apple Pay
The Apple Wallet software is already installed on the majority of Apple devices. It enables customers to save credit and debit card information on their device—typically an iPhone or an iWatch—in order to make in-store transactions. Purchases may also be made online and via other applications using the system. Users may now use Apple Pay to transfer money to friends and family through text message.
Google Pay
With the Google Pay app, customers may utilize a secure payment method to purchase goods and services from participating offline and online merchants. Google gives the store an encrypted number linked to the user’s payment card rather than a credit card number. Users may send and receive money using an email address or phone number, much like Apple Pay.
Samsung Pay
Samsung also released a digital wallet that lets customers save their credit card details for use at merchant terminals. Samsung Pay customers who use their phones to make purchases may also receive cashback and other perks. Users just need to touch to check out after taking a picture of their card or a barcode.
Visa targets mass adoption for its contactless payments offering in India
The use of contactless cards by consumers and companies is accelerating. Contactless cards are fantastic for daily transactions. For payment, you may swipe your card or smart device at the point of sale.
Visa, a worldwide pioneer in digital payments, is marketing its Contactless payments product as a simple and easy choice for the “Aam Admi” (common man) as well as wealthy customers, who are driving its adoption in India.
That’s all Folks!
In many nations, especially since the onset of the coronavirus pandemic, tapping a card on a terminal has become the standard. Would more people use their cards during “regular” hours if this payment method was available? Will electronic payment systems eventually replace cash? You can get Contactless Cards from several banks, and they still have the traditional Chip and PIN security. In this way, you may choose which method to use. Secure transmission and encryption are used for all data sent between the store and the bank. Each transaction is limited to a single payment, regardless of how many times your Card is touched by the Card reader. Stores throughout the globe accept many forms of contactless payment cards.
American Express Contactless Cards in India are backed by a comprehensive fraud protection guarantee. If you report a questionable transaction to AmEx, you will not be held responsible for it. In addition, the HPCL Coral Visa Contactless Credit Card from ICICI Bank makes it simple to make purchases anywhere Visa is accepted. Simply “swipe” or “tap” the card to complete the transaction.
