Following the launch by the State Bank of India (SBI) of a contactless payment watch in partnership with the watchmaker Titan, Axis Bank too much launched has launched a laptop with which you can pay in stores and restaurants, and it only costs Rs 750. The bank has partnered with Thales and Tappy Technologies to launch the “Wear ‘N’ Pay” product which includes also a key ring, watch buckle and a payment band.
The launches come shortly after the Reserve Bank of India increased the limit for contactless transactions from Rs 2,000 to Rs 5,000, encouraging more transactions using contactless technology.
What is contactless technology?
Portable devices and smartphones with near field communication (NFC) use radio frequency identification (RFID) technology to communicate with contactless point-of-sale (PoS) devices and connect with bank cards. The technology works when the two devices are in close proximity to each other, but the devices don’t have to be touching each other and the transaction happens almost instantly, much like a smart card used on the subway.
This technology allows you to not carry cash and use portable devices or just your smartphone to purchase products and this technology is increasingly found on newly issued debit and credit cards by Indian banks. .
Why is this development important?
QR code-based payments are unique to China, India, and other smaller countries, while the rest of the world uses contactless payments via NFC. With PoS machines and phones with NFC becoming more common in India, like what you might see in the US or UK, these wrist devices and greater adoption of the technology could pave the way for more sophisticated payment method in the future.
Global research and consulting firm, KPMG in a report saying that contactless payments are an important factor for the growth and adoption of digital payments in India going forward.
In the midst of the pandemic, card-based PoS terminals are experiencing a decrease in use and adoption. In fact, about 30% of the 5.7 million PoS machines deployed in December either became inactive or were returned, according to a report by CapTable citing senior executives of companies that deploy these terminals for banks. The bulletin added that QR code stickers have become more popular during this period as merchants do not incur the costs of operating PoS machines and contacts are also limited.
Is contactless technology safe?
The way Google Pay works in India is unique due to the low adoption of NFC technology and the greater prevalence of payments based on QR codes. In other countries, Google and Apple’s contactless payment solutions partner with banks and act as an interface on your phone to pay using your debit or credit card with security technology.
Contactless technology when used on smartphones is more secure due to the requirement of biometric authentication to process a transaction. However, when contactless cards are exposed without sufficient protection, thieves can use foaming machines to trick your card into processing a transaction. These machines are increasingly sold on the dark web.
The security of portable devices is still unknown as they are not yet very popular. However, Axis Bank offers fraud coverage up to 100% of the purchase limit on devices.
With more infrastructure and regulations supporting contactless payments and greater adoption of these devices in urban centers, portable and contactless transactions may well be the new trend in banking.