There is a coolness to contactless NFC payments and some perfect applications. Mass transit is ideal, which in the US alone covers 35 million trips each weekday. Globally, more than 247 billion public transport trips were made in 39 countries in 2015. That’s a lot of fares. And instead of piling in dollars, euros, rupees, or yens into a collection box, the NFC card offers a perfect solution for getting people through the turnstyle.
The Reserve Bank of India, which seems to like mandates more than consumer evolution is becoming a driving force in NFC rollout, which Bank Info Security talks about today.
- As part of its ongoing push toward cashless payments, India is taking steps to ramp up the use of contactless payments, which are already becoming more common in Japan, South Korea, Australia, the U.K. and the U.S.
- RBI is requiring card issuers to launch contactless cards and merchants to upgrade their infrastructure to accommodate them. It has created rules for securing the transactions, stressing the need to balance security and convenience
- In addition, the finance ministry has asked all banks to issue near-field communication-enabled contactless credit and debit cards for all customers.
Unlike the U.S. where a PIN is not used, India will require a second authorization factor.
- Card-not-present transactions for cards issued in India, including for contactless transactions, are secured with an additional factor of authentication, such as a PIN or a dynamic one-time password
But the industry is nearing a tipping point on contactless.
- Globally, over 1.5 billion contactless payment cards were expected to be issued by the end of 2018, accounting for 50 percent of all payment cards shipped, Visa reports.
- Some 20 million Visa contactless cards have been issued in India since the effort was launched in 2015. Plus, 1 million terminals have been installed in India to handle these cards.
- Nearly 94 percent of payment card transactions are contactless in Australia, according to Visa’s Ramachandran.
- Countries in the Asia Pacific region, such as Australia, Taiwan, and Japan, have witnessed a higher penetration rate of contactless payments compared to other countries, researchers say.
Security is the largest issue, particularly as mobile devices play such an important role.
- But Venkatachalapathi, principal architect, Ezetap Mobile Solutions Pvt. Ltd., explains in a blog post: “The NFC functions on your phone go into active mode only when you want them to. For instance, the chip will get activated only when you checkout at a retail store with contactless POS. The chip won’t even work if your phone is in standby as it needs to be invoked by you.”
For now, expect steady, aggressive growth in NFC payments. An NFC flash will get you on the way to work (and home) quicker.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group