Banks & Card Companies are promoting NFC or Tap & Pay Model in a big way post COVID-19 pandemic, do you ever think, why is it so ? – Recently SBI Card Services has hiked the Pay & Tap transaction limit to Rs 5000 from existing Rs 2000. In the wake of the COVID-19 pandemic, card companies and banks are pushing near-field-communication (NFC) based payment options for customers in a bid to avoid debit or credit card swipes at retail outlets.
Big players like Google Pay has already launched a tokenized card option with Axis Bank, SBI Cards and Kotak Mahindra Bank where as HDFC Bank alongside Visa have now enabled merchants to accept contact-less card payments via their smartphone.
The National Payments Corporation of India is also working on an NFC solution for the UPI platform that will be used on POS devices.
Also Read – Contactless Payment How Does It Work ?
Why is NFC not Popular in India ?
Key Highlights :
NFC technology has been around for nearly two decades and the first smartphone with NFC technology was launched a decade ago, the adoption of this technology in India for payments is only gaining steam after pandemic.
The use of NFC in smartphones for digital payments had not taken off for three reasons.
- The first is the low penetration of digital payments,
- The low penetration of NFC smartphones among consumers and
- The low penetration of NFC enabled POS devices.
Back in March 2017, Samsung Pay launched its app which supports NFC payments, through card tokenization, across a range of smartphone models and in partnership with several banks.
Also Read – How to Use Credit Card on Google Pay ?
Growth of NFC or Tap & Pay Model
While most NFC-based payment solutions require merchants a POS device to accept payments, banks and payment companies are now pushing NFC payments on smartphone devices as it reduces the cost of merchant acquisition.
Google Pay on its part is working with banks and card companies to primarily increase debit and credit card acceptance across the country. SBI Cards and Payment Services said that their partnership with Google Pay will allow their credit customer to use a tokenized version of their cards to pay online or physically at merchant outlets. Through this partnership, the company hopes the acceptability of SBI Cards as a payment mode will increase.
Targeting smartphones over POS devices
In June this year, Mastercard launched a soft-POS solution, with Axis Bank and Worldline India, which allows merchants to use their smartphones as POS devices. It allows transactions through physical means, Bharat QR-codes and NFC payments among other services.
At present, transaction limits on NFC payments have been restricted to a maximum ₹2,000 per transaction since there is no second factor authentication for “tap and pay”, as per Reserve Bank of India guidelines.