The merchant at your neighbourhood store (kirana) may soon be able receive small-ticket payments on his smartphone for purchases you make using contactless cards.
This is a step up from using hefty Point of Sale (POS) devices.
Global payments major Visa is set to enable POS operators and fintech companies to upgrade merchant smartphones with NFC (Near Field Communication) and RFID (Radio Frequency Identification) technology to accept digital transactions from contactless cards.
The technology, called ‘Tap to Phone’, will allow merchants to process payments made through contactless cards directly on their smartphones without having to use the swipe machines.
This is expected to reduce both the cost of setting up the infrastructure and handling these intermediary devices, used to process small-ticket retail transactions instantly.
“We are working with both large players and nimble fintech companies as well. The pilots have been successfully conducted. We will see this trend pretty much immediately, say from January or February,” T R Ramachandran, Group Country Manager, India and South Asia, Visa told ET in an exclusive interaction. The US-based payments network operator said it was in the process of issuing certifications on security standards for the fintech companies and banks that will deploy these devices.
“It is estimated that there are nearly 60 to 80 million MSME outlets in the country, but there are less than 5 million POS machines in operation. We should not let the capex — which is $150 to $200 — hinder the rollout of these merchant discount devices,” said Ramachandran.
The HCE or Host Card Emulator technology is already being used by large players such as Samsung, Apple, and SBI Cards to create digital wallets linked to their cards. This enables customers to make instant payments at merchant points without physically using their cards.
The new technology will ‘reverse engineer’ the same process to make the smartphones the receiver of payments instead of transmitters, Ramachandran said.
“There are several use cases where smartphones with HCE (Host Card Emulator) technology can function as cards to transfer funds. We’re thinking if they can transfer, they can also receive,” he explained. As per the latest Reserve Bank of India data, there are about 835 million debit cards and 52.5 million active credit cards. The number of POS devices has been pegged at 4.6 million as of September 2019.
A contactless card uses a chipbased technology to complete transactions through a secure radio interface. These transactions, unlike traditional swipe transactions, does not require a customer to complete a two-factor authentication process involving a secure pin or One Time Password (OTP) to make payments under ₹2,000, as per the RBI’s current mandate.
No comments:
Post a Comment