Contactless payments for a cashless economy

Vinit Soni : Default

By Vinit Soni | January 14, 2019

Cash-based transactions have been the mainstay of our economy since independence. With demonetization and digital payment initiatives such as Unified Payments Interface (UPI), the government has been putting significant emphasis on cashless transactions. To facilitate a seamless transition to a cashless economy, digital payment methods are becoming increasingly simpler, faster, and safer for both customers and merchants.

Contactless payments

Credit and debit cards enabled with Near Field Communication (NFC) are at the forefront of contactless payments. Just a tap on the POS terminal with an NFC enabled card can enable customers to make a payment. Contactless transactions get approved within three seconds or less. The payment experience is simple, quick, and easy. Customers need not worry about the safety of their physical wallet, keep track of cash spent, or count the money numerous times for assurance.

Another increasingly popular method of contactless card payment is through a payment app on a smartphone or a smartwatch and a contactless terminal. Here again, it is the NFC that enables these devices to identify each other and communicate without the need for Internet access.

More business for merchants

Contactless payments can prove valuable for merchants to commission mass payments of regular nature with speed. Merchants often lose customers as their retail outlets grapple with long queues at the bill payment counter. Customers are daunted by the sight of long queues and look for avenues where the wait time can be lesser. With contactless payments, customers now have the option of making purchases with just a tap of a phone or a contactless card on a POS terminal.

Contactless card transactions are not only quick and easy, but also safe and secure. For merchants with high volumes of customers speed of service is essential. Hence, contactless payments are particularly beneficial for supermarkets, quick-service restaurants, convenience stores, movie theatres, fuel stations, and pharmacies.

One more step towards a cashless economy

While the use of digital payments is growing, customers tend to avoid using these modes due to a lack of awareness or fear of security and privacy risks. Promoting awareness about the speed and security features of contactless payments is the key to generate interest among people and increase adoption.

Recently, most cardholders received new debit cards from banks while their old cards were still functional. This was due to the RBI mandate of replacing all magnetic strip cards with EMV (Europay Mastercard and Visa) chip cards by December 31, 2018. The new cards have an augmented safety feature which is devised to prevent skimming and cloning of cards at POS terminals. Additionally, the Ministry of Finance has directed banks to work aggressively on NFC-enabled cards.

With these measures, dependence on cash is certainly going to reduce in the future. In this scenario, it is important for merchants to be ready to accept contactless payments. At Pine Labs, our Plutus Smart terminals are contactless-payments- enabled. This means that the terminals have all the hardware needed for contactless payments and merchants only need to enable the software to activate the feature.

The future of payments is digital and mobile phones are the devices of choice. Hence, it is imperative for merchants to embrace new contactless payment technologies. At Pine Labs, we are committed to help merchants make this transition.