During the COVID-19 pandemic, contactless payment served as a godsend facility for many. It is a mode for you to pay for products, goods, and services through RFID technology instilled in your card. Also, note that you as a customer can use the contactless payment mode to make the payments through the apps stored in your phone.
What’s a contactless transaction?
Many consumers are not familiar with the definition linked with contactless transactions. During the contactless transaction, you can authorize your payments for the purchase of goods and services through the pay wave route using your card or make the payment using your bank’s app, or other payment modes like PayTM, GPay, PhonePe, Whatsapp Pay, Amazon Pay, etc. Contactless payments are even addressed by terms like tap and go, touch-free and proximity payment. Contactless payments are known for the security it offers. Moreover, this system of paying in a contactless mode became increasingly popular among many owing to the COVID-19 pandemic as most ensured to avoid any direct contact with humans when in store for purchase goods. Are you clear about this concept? If not, understand this with an example. Suppose you have accounts with 2 banks namely Indian Bank and Indian Overseas Bank. Now, a decade ago, if you required an amount of Rs 5,000 to Rs 8,000 then you would have visited as per the Indian Overseas Bank timings and Indian Bank timings to collect the amount. However, now owing to the growth of digitization, you do not require visiting your respective banks for withdrawing cash to use the same for purchases. You can directly link your Overseas Bank and Indian Bank with apps like PayTm, GPay, Whatsapp Pay, PhonePe, etc. to make direct payments in a contactless manner instantly through the app.
Contactless payment – history
When using a contactless payment for buying goods and services, a frictionless checkout procedure is implemented. Read on to know about the history linked with contactless payment.
∙ Seoul bus transport association was the first to come up with a contactless payment card in the year 1995.
∙ First iteration of EMV security was started in the year 1996.
∙ ICICI bank started the first contactless debit and credit card in India in the year 2015.
∙ Google wallet as well as Android pay allowed contactless payments through your phone in the year 2011.
∙ Android pay and Google wallet merged in the year 2018. This merger came to be known as Google Pay.
∙ COVID-19 pandemic concerns enhanced the usage of contactless payment since 2020 in India.
How does the contactless transaction work?
RFID or radio frequency identification technology is utilized in contactless payment cards. Authorised mobile devices and contactless payment cards contain the RFID microchip, antenna, and transponder. When you hold the card close to the card reader, it simply connects with it to make the transaction. Information on the card gets validated by waving it in front of the reader. When the card or the authorised device is used for transactions, the contactless payment microchip instantly generates new verification or authentication values. This transmission of data varies considerably from magnetic stripe cards.
The transaction then is transmitted to the card issuer through the merchant’s POS (point of sale). The card issuer next approves your transaction post reviewing it. When the conventional magnetic card gets swiped, the card reader gets your billing info. The data can be sold on the dark web or can even be intercepted and utilized by others. When the transaction is performed wirelessly, the only information or data that is intercepted is the authentication code that indicates the transaction has occurred.
Every time the chip card is used, a new code gets generated, making it tougher for the thieves to copy the card and then use it for making buys. Basically, it is impossible to replicate the authentication mechanism. Moreover, smartphones contain additional security measures that need you to validate your identity using a technique like FaceID before making a contactless payment.
What are the benefits of opting for contactless payments?
Making contactless transactions is twice as swift or quick as traditional card payment and can be performed in less than fifteen seconds. The payment is completed quickly, turnover may likely enhance, and queues are very less likely to form when there’s less cash handling and processing. As pin codes are no longer needed and transactions just require a quick touch on the scanner, the staff behind the register may be lowered and distributed across the store to ameliorate other customer care aspects and better shopping experience.
Contactless payments have gained massive popularity owing to their potential to permit you to conduct quick transactions. You can make the payments more instantly as you do not require inputting any PIN. Also, you are not required to carry any cash and withdraw cash continuously through the bank for purchases. Thus, contactless payment eliminates the hassles and simplifies your transaction. Still not convinced. Consider this example, suppose you have an account in Indian Bank, and you want an amount of nearly Rs 10,000 from that bank, however, it’s a weekend, so the bank is closed. So, what should you do now? As the bank operates as per Indian bank timings, so you cannot visit the bank anytime at your convenience, but you can transact at your convenience if you link your Indian bank account with payment apps or use the bank’s net banking account or app. Downloading the app and making the transaction will fairly take a few minutes. So, you see the amount of time and hassle you can save if you choose to make online and contactless payments.
Use of contactless payments is not limited to just cards. Contactless readers use NFC technology for communicating with phones and linked electronic devices like watches. The wireless technology used for payment through mobile is even identified as near-field communication or NFC technology and this connects through radio waves. With the launch of Apple pay in the year 2014, you as a customer can make buys even if you lost or forgot your card by using your phone to perform the transaction. Additionally, this was enhanced with the introduction of Apple Watches. The choice to buy directly using your wallet without taking your card out simplifies the payment procedure even more for you as a customer.