For decades now, how we store, access and spend our money has been shifting. In today’s fast-paced world, technology is revolutionizing how we make financial transactions. One such advancement is contactless payments.
Have you started using the contactless transaction feature, a.k.a tap to pay? Are you still worried about how secure it is? Don’t understand how it works?
Today, let’s demystify contactless transactions. Understand how contactless payment cards work and their benefits.
Estimated read time: 3 minutes and 03 seconds
Buckle up. Here we go!
What is a contactless transaction?
Contactless transactions are a convenient and hassle-free way of making payments using a contactless payment card or a mobile device.
Unlike traditional card payments, where you have to swipe or insert your card into a payment terminal, contactless payments rely on radio frequency identification (RFID) technology and near-field communication (NFC) technology.
This technology enables a secure wireless connection between your card and the payment terminal. Not just cards, this technology allows you to make contactless payments with your phones, watches and other devices too.
How do contactless payment cards work?
Contactless payment cards, often known as “tap to pay” cards, are equipped with a tiny chip and an embedded antenna. When you make a contactless payment, the payment terminal emits a radio frequency signal that powers the chip in your card.
This allows the card to transmit the necessary payment information back to the terminal securely and swiftly. Typically, the transaction is completed within seconds, making it swift and efficient.
If your mobile phone has NFC, you can add your credit and debit card to apps like Apple Pay, Google Pay, Samsung Pay, and Cred to enable contactless payment from your mobile.
Benefits of contactless transaction
Contactless payments offer a seamless checkout experience. Just a simple tap of your card or mobile device is all it takes to complete a transaction.
Contactless payments are lightning-fast, allowing you to breeze through queues and reduce waiting time at checkout counters.
With contactless payments, you no longer need to physically handle cash or exchange cards with merchants, making it a safer and more hygienic option, particularly in the era of COVID-19.
Contactless payment cards use advanced encryption technology to safeguard your payment data. Additionally, in India, RBI has set limits on the transaction amount for contactless payments, adding an extra layer of security.
How secure are contactless transactions in India?
Contactless payments in India are highly secure. The Reserve Bank of India (RBI) has implemented stringent guidelines and protocols to protect consumers from fraudulent activities. Some security measures include:
1. Transaction limits
In India, contactless payments are subject to transaction limits, typically set at ₹2,000 to ₹5,000 per transaction. This reduces the risk associated with unauthorised or fraudulent transactions.
2. Two-factor authentication
For transactions exceeding the prescribed limit, additional authentication measures, such as entering a PIN, are required to ensure enhanced security.
3. Encryption and tokenization
Contactless payment cards utilise encryption and tokenization methods to protect sensitive payment information. Tokenization replaces your card details with a unique digital identifier, making it difficult for hackers to access your data.
4. Monitoring and reporting
Financial institutions and card networks closely monitor contactless transactions for any suspicious activity. In case of any fraudulent transactions, they provide customers with easy reporting mechanisms to mitigate any losses.
Our thoughts on contactless transactions
Did you know, as of Dec 21, 26% of overall debit and credit transactions were contactless in India?
Contactless payments have emerged as a game-changer in the world of personal finance, offering convenience, speed, and enhanced security to consumers.
These cards have enhanced security features, such as tokenisation and encryption, making them more secure than traditional credit cards.
As the Indian financial ecosystem evolves, contactless transactions continue to gain popularity, transforming the way we interact with money.
Embracing this technology allows us to simplify our financial lives, reduce physical contact, and stay ahead in the digital age. So, tap away and embrace the future of hassle-free payments with contactless transactions.
However, remember to monitor your transactions from time to time to avoid any discrepancies and protect yourself from fraud.
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