- Date : 24/07/2018
- Read: 3 mins
The Ministry of Finance asks banks to issue NFC-enabled credit and debit cards to all new customers. Here's everything you need to know.
The central government is hoping to accomplish 30 billion digital transactions before the end of the current year. One way to achieve this is to push for ‘contactless’ credit and debit cards enabled with near field communication (NFC).
The Ministry of Finance has written to the chief executives of banks to issue NFC-enabled credit and debit cards to all new customers. For existing customers, whenever their cards come up for reissue, they would be made contactless/NFC-enabled.
NFC-enabled cards have a chip that allows the user to simply tap the card at the point-of-sales (PoS) terminal instead of the traditional practice of dipping or swiping, which requires physical handling by the merchant.
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With an NFC card, the cashier punches in the transaction amount first and the customer verifies and taps the machine with the payment-enabled card. Alternatively, customers can also use a payment app such as Samsung Pay or ICICI Pockets, along with a phone that supports NFC payments, to complete the transaction.
The letter stated that since most PoS terminals are capable of interacting with NFC chips, incorporating them with credit and debit cards will help increase digital transactions.
According to Reserve Bank of India or RBI data, the use of debit cards at PoS terminals witnessed a 24% increase in April 2018, up to 333 million transactions from 264 million during the same period a year ago.
The ministry is looking at this as the next generation of innovation in plastic money, with ease of transaction drastically lowering the time needed per transaction and reducing the probability of card-related fraud.
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The convenience of using such cards is expected to take a larger slice of the pie from cash-based transactions. At the same time, it will reduce RBI’s burden of grappling with increasing financial frauds.
The notification is in line with global trends, where payment companies around the world are trying to promote tap-and-go payment solutions. During the Winter Olympics earlier this year in South Korea, Visa had aggressively showcased this cutting-edge technology.
Going ahead, the idea is to encourage use of the technology beyond merchant transactions and across platforms. Mass transit options such as metro, local suburban trains, monorail and state bus services will be upgraded to accept payment from such cards.
Passengers travelling via public transport would be able to just tap their NFC-enabled cards on PoS terminals, and the corresponding travel fare will be deducted directly from their bank accounts.