In a letter marked to chief executives of banks, a copy of which was seen by ET, the ministry said that NFC or contactless cards are the next generation of innovation in the cards space which can bring about added security and convenience for digital payments, hence banks should start giving out such cards to its customers.
“As and when cards need to be re-carded, then at that stage the new cards being issued can be NFC enabled/contactless and whenever new cards are being issued they could also be NFC enabled/contactless,” read the note circulated by the ministry. Further the ministry said in its note that if such cards are issued then they can be used for mass transit like metro, railways and even buses where consumers can just tap their cards and the ticket price can be directly debited from their bank accounts.
Highlighting the fact that most point-of-sale (PoS ) terminals are capable of reading NFC enabled cards, the ministry said that this could help push up adoption of digital transactions in the country.
The government is known to have set an ambitious target of 30-billion digital transactions to be accomplished within the current year.
The finance ministry’s notification to banks comes at a time when payment companies have been experimenting with tap and go globally and trying to promote it majorly across. Visa had showcased this technology among other places at the 2018 Winter Olympics that happened in PyeongChang, South Korea.
“From our experience at Visa, be it Australia or UK wherever it is implemented, contactless payments have taken off at the expense of cash. Contactless payments are also one of the most secure ways to pay at the point of sale since they use the same dynamic security as contact EMV cards,” said TR Ramachandran, group country manager at Visa.
NFC-enabled cards allow users to just tap the point-of-sales terminal instead of having to dip the card or swipe the card which requires physical contact. “Contactless requires a behaviour change for the cashier, unlike traditional cards where swiping happens first followed by amount and pin entry contactless requires the cashier to enter the amount and then tap the card,” said Rajeev Agrawal, chief executive officer at Innoviti Payments which deploys PoS terminals for banks.
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