The nation's first contactless debit and credit cards were introduced by ICICI Bank in June 2015, allowing customers to make purchases by just waving the card in front of merchant terminals rather than swiping it.
Due to the COVID-19 pandemic, contactless payments in India increased six times in the past three years, from 2.5% in December 2018 to 16% in December 2021.
The phrase "contactless card" may give you an idea of what it is. But it is essential to comprehend how it functions and what qualities it has. Let's go through these in more depth.
What is a contactless card?
Using RFID technology, a contactless card enables you to wave or hover the card over a card terminal to complete a transaction. Your card information is transmitted by the card in the form of short-range electromagnetic waves, which the point-of-sale system picks up and uses to complete the transaction.
When it comes to making an in-store purchase, using these cards is one of the most common payment options. These cards streamline transactions by enabling contactless payment from customers.
Contactless cards operate in the same way as mobile wallets do. Compared to inputting, swiping, or spending cash, it can be up to 10 times quicker. Additionally, it safeguards your information and keeps your hand off the card reader.
How does it work?
Contactless cards utilize radio-frequency identification technology (RFID). This enables communication between the card and the card reader while the card is in close proximity to the reader during a transaction.
Additionally, most contactless cards have an EMV chip in addition to the standard magnetic stripe, credit or debit card number, expiration date, and security code. As a result, cardholders have several alternatives at the cash register. You may still swipe your card or utilize the chip reader at a store without contactless readers.
Your card information is securely authenticated when you place your contactless card near the reader. The transaction is then transmitted to the card issuer, using the retailer's point-of-sale system. After that, the transaction is examined by the issuer before being approved.
Are there any risks associated with these contactless cards?
Contactless payment is a very convenient and quick method of making payments. However, like with other technology, one may face security risks while using these.
With contactless cards, actual card possession will be the primary security risk rather than card skimming. When utilizing contactless payment, there is often no need for a PIN or signature, so if your card is lost or stolen, someone else might use it without your knowledge.
However, the fraud departments of card issuers have grown quite savvy, so any erroneous purchases will probably be noted and reimbursed to your account. In the event that your credit card is lost or stolen, you should always get in touch with the card's issuer straight once.
The Covid-19 outbreak drew much-needed awareness to the quantity and hygiene of the shared surfaces that we all touch. Credit cards using contactless technology help reduce touch points overall. Customers are permitted by the Reserve Bank of India (RBI) to utilize contactless payments for up to 5,000 rupees using both debit and credit cards.