- Date : 07/05/2020
- Read: 3 mins
In an attempt to improve the card payment experience, the RBI has given the nod to payment networks for developing contactless transactions.
Given today’s greater emphasis on social distancing, there’s a clear need for a contactless tap-and-go payment service. Cash and normal debit/credit card payments can be risky in the current scenario. While online payments via apps like Google Pay, Paytm, PhonePe, etc. are one way to go, they can also be restrictive in some ways.
Contactless card payments
Customers will now be able to tap their cards instead of swiping them. The Reserve Bank of India (RBI) recently gave the go-ahead to the National Payments Corporation of India (NPCI) and companies like Visa and Mastercard to develop contactless card payment. Unlike the limited functionality of app payments, contactless card transactions are expected to cater to many retail outlets, including big shopping malls.
The current form of debit and credit card payments requires swiping, but tap-and-go payments will use a unique radio frequency identification (RFID) technology to process payments. This will eliminate the need for any form of contact with the card machine. To understand in detail about contactless credit cards and how do they work, read here.
Related: Corporate Credit Cards- Dos and Don’ts
Transaction limit
These devices will support all payments, even those exceeding Rs 2,000. However, in order to complete a transaction value of more than Rs 2,000, the customer will have to undergo a two-factor authentication process. They will also need to enter a PIN to complete the payment.
Importance of eliminating contact
Given the current pandemic, a completely touch-free system is a must. The transition into contactless payments is not mandatory yet, and people will still have the option to use other traditional methods like cash, swipe, etc. However, NPCI has issues an advisory for people to switch to contactless payments wherever possible.
The COVID-19 pandemic and consequent lockdown have contributed to a 40% increase in the number of Mastercard transactions. This figure was recorded in the company’s first quarter and is expected to rise even higher in the coming months.
Related: How is credit card interest calculated?
The game changers
Visa and Mastercard have been instrumental in bringing the tap-and-go technology into the Indian payment system. Visa has also been actively working on fresh technologies to enable new forms of contactless payments in smartphones. Other popular names include technology giants like Apple and Samsung and e-payment companies like Pine Labs and Worldline. These companies have been trying to introduce PoS devices and virtual debit card functionalities in devices like phones and tabs.
Related: Own a credit card? Know these insurance benefits available to you
Last words
Methods of payment need to be adjusted to minimise touch wherever possible. Not only will this ensure safety in the current times; it could also spell the beginning of a new era of technology. The lockdown has not only affected the modes of payments but also the rates of various commodities. Click here to know more about the effects of the lockdown on online and offline stores and how it can affect you.
Check these other new age ways to make payments.
