# Contactless Credit Card

Experts of music would remember how storage of music has changed from Vinyl Discs to Cassettes to Compact Discs to MP3s and other digital format of the current days. Similar is the change in the way credit cards have evolved.

The earlier forms of credit cards came with magnetic strips which stored all information on the strips. This feature made it susceptible to fraud and loss of information through skimming. Hence, the industry came up with something called as the EMV Chip cards. Chips cards are named after their developers, i.e. Europay, Mastercard®, and Visa®. The technology uses embedded microchip processors in cards that store and protect customer data.

In addition to making cards more secure, there is a new technology also being adopted by Credit Card issuers, which is called the Contactless or Near Field Communication Cards. You would have probably noticed that nowadays, your Debit Cards and Credit Cards come with a Wifi kind of symbol.

This symbol denotes that these cards are enabled for Contactless Payments.

# **What are Contactless Credit Cards?**

As the name suggests, with these cards the payment can be made by just a tapping/ waving of your card close to the Point of Sale machine. Your card need not even be taken out of your wallet to process the payment. The card uses a technology called as the Near Field Communication to communicate the required information on your card to the merchant to whom the payment is being made.

Your NFC card comes fitted with an antenna, which transmits data in an encrypted state to the POS. An added digital signature makes it all the more secure. Experts say that it is difficult to intercept these NFC waves and steal information as you need to be a merchant to have that kind of technology that can read the waves and extract information out of it.

## **What are the Pros And Cons of Contactless Credit Cards?**

As with any new technology, there will be advantages and disadvantages of its utilization. Let us look at the advantages firstly.

### **Advantages of a Contactless Credit Card**

#### _**#1: Less Time Required to Complete a Transaction**_

We all know how annoying it is to wait in a queue for your turn to bill at a local supermarket or at a mall. While the billing process may be done quickly, the payment process does take up a lot of time, often involving cash or credit card and punching in of the PIN. However, a contactless credit card may be useful in lessening the duration required for paying as all that is required for payment is a wave or tap even without the card getting out of the wallet. In fact, according to a study, these are the average transaction times for various kinds of transactions in markets where contactless credit card is widely used.*

  * Contactless credit card transaction: "**15 seconds** "
  * Magnetic strip card transaction: "**25 seconds** "
  * Cash transaction: "**34 seconds"**



### **_#2: The Card is Always in Your Possession_**

Users of this technology can be rest assured of the safety of their card as it never leaves their wallet/ hand. We have been hearing instances of fraud even with chip cards which are way safer than magnetic stripe cards. So, with this technology, the safe chip cards will be even safer.

### _**#3: Payments System is Safe**_

The payments process used in a contactless credit card is quite secure. It uses highly secure data transmission standards using encryption. As in with the EMV Chip card, contactless credit card never transmits your credit card number or other information even to the merchant and uses an uniquely created number for the transaction. In addition, it is also difficult to mimic the RFID frequency that is being used by the merchant by anyone else.

As an added safety measure, RBI has allowed only transactions of up to Rs 2000 by using contactless credit card. For transactions above this limit, PIN will need to be entered just like a normal card. Also, it has allowed a maximum of 10 transactions in a day using the contactless cards, which makes it very safe even in case of theft.

### _**#4: It Is Easy To Transact With a Contactless Credit Card**_

Transactions are more simpler and easier with a contactless credit card. It might be particularly of help to the elderly who may find it difficult to remember PIN on their card.

**Disadvantages of a Contactless Credit Card**

### _**#1: Loss of Card Can Prove Very Costly**_

Though there are measures put in place, a loss of contactless credit card can make you poorer by Rs. 20,000 (Rs. 2000 * 10 transactions), at least if you do not notice the loss immediately and report it to your issuer. And Rs. 20,000 is no small amount.

Also in case of a EMV or a Magnetic Stripe cards, the transaction is done right in front of your eyes. However, with a contactless credit card, anyone with an appropriate technology can hack your card anywhere.

### **_#2: Can Be Used Only For Transactions Up To a Certain Limit_**

Contactless cards needs PIN when used for transactions above a limit (Rs. 2,000 as set by RBI). While on one hand, it acts like a security measure, it may turn inconvenient when you have to make transactions above the set limit.

### _**#3: Chances of Spending More Often**_

Purchase transactions turn much easier with a _contactless credit card_ and in fact, may result in overspending. There are many research done all across the world which supports this point. There have been instances of increased number of transactions at retail locations with increased spending.

However, the adoption of Contactless Payments in India has been quite low as the awareness of the payment system is quite low. However, over the next 2-3 years, a lot more people are projected to make use of the technology, with the government also actively pushing for the adoption of contactless pay.

However, as with any card, we would advise you to exercise caution and handle your card with utmost security. Never give away the CVV number, the PIN or internet banking password to anyone. Ensuring basics of safety will always ensure that your card is safe.