What Are Contactless Debit Cards and Credit Cards?
Digital transactions are evolving by the day. Aadhaar-enabled payment, e-wallets, UPI – these are all next generation digital payment systems that have come into Indian economy after the recent drive of demonetization. Now, banks have added something else – contactless debit cards and credit cards.
They are no different that the debit cards or credit cards that you already have. The only thing that changes in these contactless versions is that you really don’t need to swipe the cards at PoS terminals when you are out for shopping in a physical store.
Based on the technology known as NFC (Near Field Communication), all you need to do is to wave the card right in front of the NFC-enabled PoS terminals. You don’t have to make the card touch the terminal at any point. This means that you don’t have to bring the card in contact with the PoS machine. This is precisely why it is called contactless debit card or contactless credit card.
How it works?
We are sorry! Really sorry! We cannot give you all the technical details behind the technology. Since we are not very educated folks and since we are layman, we will try to explain the whole thing in as simple a language as possible. Sounds good?
There are two things that are put in work here and they are:
- A PoS terminal which has NFC technology enabled.
- A contactless debit card or perhaps a contactless credit card.
The PoS machine, which has NFC technology enabled, actually reads the information on card wirelessly. This is called Near Field Communication. This means that the card should be within a range of the wireless reach of the PoS terminal. If the card is outside that range, the machine will not be able to contact the card wirelessly and cannot read the information in the card.
Now, what about the card?
See, let us put forward a simplest possible example. You come across a person and you want to talk to him or her. The only way you can communicate with the other person is if that person can speak (not dumb) and if that person knows the language you speak. Else, communication is not possible.
Now, PoS machines with NFC technology is understandable. What about the cards? They must have a common language so that they can contact and communicate with the PoS terminals. This is where the concept of RFID comes in. RFID is the acronym for Radio Frequency Identification.
There is a chip embedded in these cards. This chip is RFID-enabled chip and can emit the information on the card using what is known as radio waves. We cannot see these waves but they are there and only a device capable of capturing those waves will be able to read the information hidden in those chips.
The PoS terminal which has NFC technology can not only capture those waves but can decipher the information hidden in those waves.
So basically, when you bring the card near the NFC-enabled PoS terminal, the duo start talking to each other. The card gives the information like card number, expiry date, name of the customer (that is you) etc. to the PoS machine for processing the payment.
Once the machine processes the payment, you will have to key in your security PIN and the payment will be processed.
Throughout this entire period, you will not have to make the card touch the PoS terminal in any way. Just waving the card in front of the machine will get the job done.
Benefits and concerns, if any?
Of course, there are inherent benefits:
- You stay in control of your card throughout the transaction. You need not hand over the card to the merchant.
- Since you will not be swiping you card in the PoS terminal, there will be no chances of the information on your card being skimmed out. In case you didn’t know, PoS machines could be easily rigged with skimming technology and when you swipe you card on such a machine, the information on your card is immediately captured by the skimming equipment hidden in the machine. That information can later be used by scammers to lick clean your bank account.
- Finally, the transaction time is very short. The transaction can be completed within half the time it takes to complete a transaction through card-swiping mechanism.
What are the security concerns?
Banks have clearly stated that these cards are very safe. Well, banks will say that for sure because they want profits and they will try to push their products. The problem with the contactless credit cards and debit cards is that they use wireless NFC technology. A similar machine nearby can also capture the card information. There are advanced mobile devices capable of capturing RFID data through NFC. So, a fraudster can always skim the data on the card even with a smartphone. Worst part, you can’t even understand that your data has been stolen because the fraudster will not be in contact and can have the task accomplished from a distance.
While some experts claim that contactless credit cards or contactless debit cards can be game changer, we don’t see how. Here are two very basic questions that those experts fail to answer:
- Card penetration is anyway not high in India and there is a major chunk of people who still prefer cash. We don’t see how a high-end technology will attract their attention.
- Why on earth will people go for a not-so-secure card technology (because the information can be skimmed easily even with a mobile device) when there are far more advanced and way more secure technologies already available in market such as the UPI or Unified Payment Interface? There’s Aadhaar Pay as well, which requires biometric authentication and completely renders cards and e-wallets useless.
UPI, Aadhaar Pay etc. are state-of-the-art technologies developed in India and are far more user-friendly and secure.
If you ask for our opinion, contactless cards are just gimmicks. It is definitely a technology that looks elegant, works elegant but has major security loopholes. At least we aren’t adopting these cards anytime soon. What about you?