contactless payment banking

View from India: Of contactless experiences

The pandemic has made social distancing mandatory. Contactless payments and virtual interaction - outcomes of social distancing - are expected to give a new outlook to many existing norms.

Contactless card payments have increasingly been adopted since 2018. The pandemic has given the technology a push. It can be attributed to consumers’ preference of contactless transactions, as opposed to queuing up at checkout counters. This has given a boost to contactless payment cards that reduce or do away with any possibility of physical proximity.

From the technology perspective, contactless payments are based on radio frequency (RF), like an RFID (Radio Frequency IDentification) tag. In terms of safety and security, they have microprocessors that are secure enough to perform cryptographic processing. 

In simple terms, the options available in contactless payments are varied. They include QR (quick response) codes and mobile payments, as well as near-field communication (NFC) and tap-and-go alternatives. Tap and Pay payments can also happen through smartphones that are enabled with NFC technology.

To make contactless payments accessible, the Reserve Bank of India (RBI) has announced that tap-and-go functionality on card payments for all purchases is permitted. This is allowed for purchases that amount to Rs 2,000 and it will happen with a PIN (Personal Identification Number). It is operational at retail stores and shopping centres. RBI is India's central banking institution, which controls the monetary policy of the Indian rupee.

Besides contactless payments, diverse industries are wooing customers through imaginative contactless virtual experiences and services. This has brought a paradigm shift for retailers as well as the consumers. Contactless or, at most, minimal touch is the norm this year and this will probably become a way of life in many services.

Shopping malls and retail outlets are working with specialised safety-hygiene providers to scale up the surroundings. In public spaces, thermal scanners have replaced manual frisking and hand-sanitiser dispensers have been incorporated everywhere.

The shopping malls and retail industry are increasingly adopting technology to decrease the interaction between the users and products. Some of the innovative options include magic mirrors, which enables a touch-free retail experience.

Traditional retail display windows are gradually going away. Instead, digital displays pop up in stores. These are easy to dismantle. Contactless and magnetic stripe terminals that use NFC and MST (magnetic secure transmission) technology are made available for shoppers using smartphones.

Bots are beginning to replace manual invoicing in the cash counter. In the absence of the cash-sales counter person, a lot of decisions are data-driven. Customer-centric data will be leveraged to make shopping purposeful. To that extent, companies are tailoring complete end-to-end digital solutions for retail outlets much more than before.

No doubt, brick-and-mortar stores are undergoing a tech transformation, yet the aim is to ramp up the ratio between the retail physical stores and online ones. So in place of an in-store experience, many retail brands have opened out channels for online selection of products, followed by digital payment. The product is delivered to their doorstep in sanitised bags. 

Besides the retail industry, the hospitality industry is also engaging in interactive and automated technology. Cloud-based technology will be leveraged to gauge and monitor the crowd in the reception area. Guest check-ins will happen through mobile apps. Virtual reality (VR) will be tapped for showcasing a 360-degree view of the hotel.

Other than contactless payments and experiences, another outcome of the pandemic is that online shopping or e-commerce has opened up to the many citizens without a formal bank account. 

Online vendors have come up with innovative cashless solutions for buyers. Payment happens online or through the mobile. What is interesting is that even vegetable vendors procure produce online and wheel it in pushcarts. Even this segment of society has realigned its outlook - and these are people who may not have formal education or are 'unbanked'. They have now joined the community of digital buy-pay system. Incidentally, this reinforces one of the tenets of the Digital India campaign.

It is anticipated that contactless payments may become a model for our transit system. Already FASTags are being sought after for lowering the contact between drivers and toll booth operators. Hopefully, these initiatives will help the country to progress into a contactless economy.

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