Executive Summary – Contactless cards are cards that can be used to make payments in merchant establishments without requiring to swipe the card. They use NFC technology and the radio frequencies that will be activated when the card is waved or tapped on the card reader will be recognized by the reader which will then process the payment. Some banks like ICICI and SBI have launched cards with this technology and many other banks seem to be following suit soon.
What are Contactless Cards?
Contactless debit and credit cards are cards that can be used to make payments by waving the card near the card terminal. There is no need to swipe the card at the POS terminal or in a Electronic data capture machine to make the payment.
How do they work?
They work on Near Field Communication (NFC) technology. The cards use radio transmission. When the card is just tapped on the card reader or waved near it, the radio frequencies are recognized by the card reader and payment can be processed. The user then has to enter his/her PIN and the transaction is completed with the user getting a receipt.
Are these cards secure?
These cards need not be given to the merchant for swiping and so it is always in the owner's hands. This adds to security as there can be no chance of fraud when the card is given for a transaction. These cards are already used in other countries and there have been instances where mobile applications have been used to get the details from the card and thus misuse the card. But these threats are relevant to all cards. EMV technology helps to prevent such threats.
The transaction gets completed faster. There is higher security as the card need not be given to anyone. Currently one has to enter a PIN to complete the card transactions but in case of these cards, RBI has allowed to process transactions unto the value of Rs. 2000 without a PIN. These cards can be used as regular cards for high value transactions and in places where the technology is not used.
How can I get a Contactless Credit Card?
Some banks in India have launched contactless credit cards.
ICICI introduced a debit card – 'Expressions Wave' and a credit card – 'Coral Contactless Credit Card' with this technology. It has tied up with many shops and restaurants for usage of this card.
SBI has also introduced a contactless debit card 'sbiINTOUCH Contactless Debit Card' and and a credit card - 'SBI Signature Contactless Credit Card'. Some other banks are also in the process of launching these cards.
These cards have gained popularity abroad and they might become popular in India too considering the ease of use especially for low value transactions.