contact less payment technolgy

8/15/2019 contact less payment technolgy

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Contactless Payment Technologies Group Members:

Haritha

Girishankar

Nikila

PranavParvathi

Rahul p

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Topics to be discussed

• Introduction

• How do they Work

• Contactless Payment technology in India.

• Benefits of contactless payment• Key challenges

• Issues/Problems associated with contactless payments.

• Suggestions

• Conclusion

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Research Problem And design

Research problem

• To study and understand the significance and key challengesof contactless payment technologies adopted by banks.

Research Design

Exploratory research design is used to get an insight about theresearch problem

- Secondary resource analysis method was used to collect data.

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CONTACTLESS PAYMENT

• Contactless payment systems are credit cards and debit cards, key fobs,

smartcards or other devices that use radio-frequency identification for makingsecure payments.

• The embedded chip and antenna enable consumers to wave their card or fob over

a reader at the point of sale.

• Some suppliers claim that transactions can be almost twice as fast as a

conventional cash, credit, or debit card purchase.

• In a contactless payment transaction, the consumer holds the contactless card or

device in close proximity (less than 2-4 inches) to the merchant POS terminal

and the payment account information is communicated wirelessly (via radio

frequency)

• With contactless payments, financial institutions can increase transaction

volumes by capturing transactions typically made using cash. In addition, they

can differentiate themselves with innovative new form factors to

enhance loyalty and retention.

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HISTORY

• Mobil was one of the most notable early adopters of this technology, andoffered their "Speed pass" contactless payment system for participating Mobilgas stations as early as 1997.

• Major financial entities now offering contactless payment systems includeMasterCard, Citibank, JPMorgan Chase, American Express, Key Bank, TheRoyal Bank of Scotland Group, Barclays, Barclaycard, HSBC, LloydsBanking Group and The Co-operative Bank.

• The first contactless cards in the UK were issued by Barclaycard in 2008.

• As of May 2013 there are approximately 32.5 million contactless-enabledcards in circulation in the UK and over 147,000 terminals in use .

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Tap and Go technology.

• Look out for the Wave sign while making a transaction.

• The merchant enters the transaction amount and the contactless card reader promptsthe cardholder to present their contactless card.

• Customer must hold the device in front of a sensor, usually on a Point of Sale(POS)terminal .

- Smart chip and antenna in the device transmits a unique code to the sensor.• After the transaction is complete, the consumer either hears a beep or sees a flashing

light

- The transaction goes through the sponsoring networks (MasterCard, Visa, etc )

system to be cleared and settled.

• The purchase is complete.

• a signature or PIN may be required in case of amount equal to RS.1250 or higheramounts.

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COMPANIES USING THEM

• First issued by Exxon Mobile in 1997

– “Speedpass” is used at gas pumps

– Still used today

• Today – American Express – ExpressPay

– MasterCard – Paypass

– Visa – Visa Wave

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• Citi banks joins mobile and credit card partners to launch India‟s first

contactless payment solution.

• A full feature mobile payments solution where the credit card has merged

into a hand phone.

• At present Citi bank India has 2.5 million card holders in India, of which

400,000 are in Bangalore. Already 20,000 card holders in Bangalore have a

Nokia 6212 mobile phone with Vodafone connection and are eligible to use

the new payment system.

• The pilot scheme involved 500 plus local traders, 5000 users, equippedwith Nokia‟s NFC enabled 6212 phone .

• Fuelled by mobile services from Vodafone, and by MasterCard‟s.

CONTACTLESS PAYMENT IN INDIA

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Citi contactless payment stickers • Contactless payments can also be made using Citi contactless stickers.

• The stickers, which use chips from France-based Oberthur Technologies,

enable consumers to make payments of up to $50 at the point of sale.

• The stickers link to customers' credit card accounts.

• These special stickers with a built-in payment technology can be affixed to

any object you regularly carry with you (for example, the rear cover of

your mobile phone).

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Mobile Wallet

• Mobile wallet was first launched in Kenya.

• India is the 2nd market after Kenya where Bharti Airtel„s subsidiary

Airtel Money has launched a pilot initiative in Gurgaon, Haryana.

• The success of this product in the trial period will determine its

adoption by various operators and launch in other circles.

• Airtel has tied up with various retail outlets.

• Companies like Its Cash are about to launch their wallets shortly.

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Future

• Mumbai Metro One Private Limited (MMOPL that will implement andoperate the project, will soon roll out over 5 lakh contactless smart

cards (CSC) and 4 lakh contactless smart tokens ( CST).

• Non-personalized smart cards will also be available.

• These can not be blocked and replaced; this type of CSC is like a

currency note, which is transferable and can be used by any personwho lays his hand on it.

• According to the guidelines of the Reserve Bank of India, the balance

on the CSC can be up to Rs 10,000

• It can be used as a multi-purpose card for all transport services which

operate on automated fare collection (AFC) technology

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Benefits of contactless payment1) For business/ Retailers

Operational efficiency competitive differentiation

cost saving

Easier reconciliation

customer satisfaction

2) For customers

convenience and ease of use

safety and security

flexibility of alternate form factors.

quicker transaction

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Customer attitude towards contactless payment

In August 2006, Javelin Strategy & Research collected data aboutconsumer experience with and attitudes toward contactless payments.

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Consumer motivators for using contactless payment

According to the results of the Javelin survey the responses clearlyindicate that the strongest motivator for such use is convenience

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Key challenges• Securing the valuable information's of the customers is the major concerns about

this technology.

• Creating awareness among the customers about the NFC

• Convincing people to use the New technology which contrasts to the earlier

lessons thoughts about the importance of PIN ,Secret codes etc by the banks.

• it is feared that having this much information available "in the open air" will leadinevitably to problems.

• Mobile payments is a complex ecosystem with many players and success of each

players depends upon the joint action by all the players.

• He biggest obstacle to commercial adoption has been merchant acceptance of the

new platform, which requires them to purchase and install RF reader terminals

and pay higher costs per transaction than with traditional magnetic stripe cards.

• Acceptance by the SME ‘s as additional costs are involved and Ambiguous ROI.17


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Problems / Disadvantages

– Devices can be read from a few inches to a few feet awayincreasing the risk of fraudulent use.

– The loss or theft of contactless cards

- In the case of low value payments , contactless paymenttechnologies will remove the need for the consumers toauthenticate every payment using their PIN numbersupplied with their card.

- Consumers will be able to make a number of low

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Problems / Disadvantages (cont…)

• Contactless cards are more exposed than regular creditcards.

• A thief armed with a suitable reader, within a few feetfrom you, would be able to interrogate all of the cards inyour wallet or purse without your knowledge.

• A regular credit card transaction is fairly secure; themagnetic strip is swiped at very close range (less than amillimeter).

• Mischarging Instances reported by customers ie a few

customers have reportedly had payments charged to thewrong card or been charged twice due to contactlesscards being inadvertently debited (UK)

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SUGGESTIONS

• Enable Watch(Gear), Mobile phone alert etc.

– Enable the service of mobile phones and other gadgets to getnotified every time when transaction occurs.

• Lower SME Rates. – Banks who provide the service likely to join hands with the

retailers and make the SME rates lower to the customers.

• Choice of outlets. – Customers should try to choose various outlets only from where

they will conduct the contactless payment.

• Customize Maximum amount. – - The customer can make some customized figure as the

maximum limit for every transaction done throughcontactless cards.

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Conclusion

Contactless payment technology is the latest technology that is more likely tomake banking more simple .

• It provides a lot of benefits for issuers, consumers and merchants.

• There are many issues and challenges associated with the adoption of

technology which is common to almost all kinds of Technological banking techniques.

• The future of contactless payment is still uncertain in India , though the benefits are clear. The lack of consumer awareness and the lack ofconfidence in security means are one of the main challenges. Unless these

barriers are broken, contactless payment will be at risk of not showing itsfull potential.

• Protecting ones identity i.e. keeping the payment card safe can help inpreventing any kind of fraud.

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References

• http://www.independent.co.uk/money/spend-save/contactless-cards-

the-pros-and-cons-of-new-payment-technology-1968747.html

• http://www.thehindubusinessline.com/industry-and-

economy/banking/soon-just-wave-your-card-and-

pay/article4772775.ece • http://www.business-standard.com/article/finance/citibank-launches-

next-gen-mobile-payments-in-india-109070100008_1.html

• http://articles.economictimes.indiatimes.com/2012-05-

28/news/31877090_1_payment-mode-contactless-card-based-

payment

• Www.citibank.com

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