Contactless payments, make checkout easier, and they are faster than fumbling with cash along with being seamless and secure, hence, the increase in adoption.
Contactless payments are a secure method of paying digitally. One can simply tap a debit, credit, smart card or any other contactless-enabled device to a POS terminal equipped with contactless payment technology, to complete payment.
Sujay Vasudevan, Head of Cyber and Intelligence Solutions, South Asia, Mastercard, says, “Contactless payments use radio frequency identification (RFID) technology and near-field communication (NFC) that enable touch-free transactions. Its no-touch experience technology replaces cash and allows customers to pay using their cards, smartphones or digital wallets.”
Contactless payments, experts say, make checkout easier, and they are faster than fumbling with cash along with being seamless and secure, hence, the increase in adoption. “Due to the encryption to every purchase is unique, it protects cardholders’ transaction data. Also, the card or device never leaves the consumers hand, thereby reducing the risk of loss or misuse,” adds Vasudevan.
A Mastercard global consumer study conducted in April 2020 stated, nearly 8 out of 10 consumers used contactless payments and 46 per cent to 52 per cent of customers swapped out their top-of-wallet card for one that offers contactless payment. Industry experts sat already, 25 per cent of cards are contactless, and India will be witnessing accelerated growth in the deployment of contactless payment terminals.
Given the various benefits of safety and hygiene, many governments across the world have increased contactless transaction limits in the wake of Covid-19, to contain the spread of the virus. In India, the Reserve Bank of India (RBI) increased the limit to Rs 5,000 on tap-and-go payments earlier this year.
Myths around payment methods like contactless cards, QR codes and tokenization
One of the key misperceptions around these new payment methods is that they are not safe. Vasudevan says, “Contactless payments use unique encryption for every transaction which makes them absolutely safe. Further, the consumer is in control as the contactless-enabled card or device doesn’t leave their hand to complete a payment, reducing the risk of fraud. As such, there are no accidental payments or double payments.”
Also, sensitive payment account information found on payment cards, such as the 16-digit account number, expiration date and the CVV code remain more protected. Simply put, experts say contactless-enabled credit, debit or prepaid or device is one of the most secure ways to pay.
Similarly, tokenization is equally secure. It allows payment to be processed without exposing actual account details and a unique digital identifier – called a token – replaces the 16-digit account number.
Key things that one must keep in mind while opting for contactless payments
Consumers must follow the same rules of caution as with any other digital payment method:
- Do not share any confidential information or click on an unsecured link and beware of fraudulent attempts by hackers.
- Do not disclose OTPs and other payment details freely.
- Do not scan unknown QR codes. Exercise caution while scanning.
- Be cautious while opening any suspicious emails or attachments that can give hackers access to the device and information stored on the device.
How are new technologies such as AI & ML play in securing contactless payments?
Technologies like Artificial Intelligence (AI) and Machine Learning (ML) are being applied to enhance fraud detection and improve the safety of digital payments. Industry experts say these technologies facilitate advanced intelligence to assess behaviour patterns and create a layered defence against an unauthorized person to access information and avert online frauds.
“While 3D secure technology improves authentication for e-commerce and m-commerce environments, algorithms powered by AI-ML proactively pick up any irregularity in the payment flow and alert a bank in real-time. Deploying AI-ML also plays an essential role in contactless payments with biometrics such as face recognition or remote video, gaining more popularity,” adds Vasudevan.
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Industry experts say a series of rapid technological advances and changes in consumer needs and behaviour have provided organizations with the scope to innovate and offer cutting-edge payment solutions. “The pace of digitization is set to accelerate, spurred by the significant benefits and options that it promises to deliver to customers to meet the latent need,” says Vasudevan.
He further adds, “The form factors, product features and user experience will continue to evolve but underlying them is the vast customer base that is demanding simple, safe and seamless solutions.”