The digital payment industry of the country is highly fragmented. Players from top retail banks to technology companies, ATM manufacturers and card network operators, UPI players, and POS deployers, are now looking at opportunities to render their services contactless.
This new shift towards contactless payments is not only an attempt to drive adoption, but will also remove the legacy challenges that had earlier constrained growth, such as the rising cost of merchant acquisition, and the friction in payment experiences.
The coronavirus is leading to a rising fear among consumers to make card payments when there is physical interaction. This will remove unnecessary touches, and make payments safer.
As per private lenders, 70 percent of its 5 lakh POS devices can process contactless transactions. The bank has also recently partnered up with Mastercard and Wordline. This will offer the functionality of POS machines to smartphones of merchants, through the contactless technology of NFC.
This move will also significantly reduce the costs of devices as well.
14-15 percent of the total card-based transactions in volume were made through contactless modes in June. About 40 percent of the 50 lakh POS devices accept contactless card payments. As per the latest data by RBI, banks have deployed 2.1 million Bharat QR codes also for the contactless payment acceptance.
Metro projects in Delhi, Bangalore, and Kochi are all also learned to be piloting the use of NFC based contactless card payments. Later in the year, public transit services will also open up.
NFC technology also allows for tap and pay on payment terminals and through mobile phone payment apps. Customers and merchants will both benefit from the speed and efficiency of these transactions.
RBI is further helping in this move towards contactless transactions, as per its new guidelines which will allow contactless card transactions below INR 2,000 to be accepted without PIN authentication. Card network operators like Mastercard and VISA, as well as other leading banks, are trying to increase this limit to INR 5,000.
ATM operators are also looking at opportunities to realign processes, to make the cash withdrawal process contactless. SBI and BOI were the early movers in this space, who brought about OTP withdrawal.
Customers just have to scan the QR code to withdraw money in this new launch. This service is now becoming more and more popular, and few banks have already launched it.
Fino Payments Bank is also working with NPCI to build a system that will use face recognition technology for withdrawal at miro-ATMs through an Aadhar-enabled Payment System.
In July, UPI saw transactions at a record-breaking high of 1.5 billion transactions, as per data by NPCI.