“Swipe karo, aaish karo” was the moto of the of first decade of the 21st century, wherein person irrespective of age was happily using his debit/credit card for shopping. The Digital India movement of the NaMo Government also boosted the use of plastic money. Ever since the demonetisation people are afraid of hoarding spare cash at home and are seen transacting using digital wallets more frequently. PayTm recorded the highest registration in a single day (over 130 million registration) & ever since then people were happy to use plastic money instead of physical currency.
What if banks provided something more of innovation to the traditional cards?
Contactless payments are becoming increasingly popular as it is faster and easier alternative than to enter PIN for every card transaction. It allows you to make a payment by tapping your contactless card on a payment terminal and complete transaction without any authentication. Short range proximity contact will require 2 cm to 10 cm distance from the portal to tap and make the payment in less than 1 second as opposed to 10 in the traditional cards.
Components: These cards are embedded with RFID (Radio Frequency Identification) or NFC (Near Field Communication). These could be stored in form of digital wallets, payment apps in smartphones or devices. No signature is required for verification which provides a small window for fraudulent activities. EMV (EuroPay, Mastercard and Visa) chip that is stored in the card provides larger spectrum for the point of sale transactions. Contactless transactions could be traced back to early 2007’s.
Laws Governing Contactless Cards: RBI has made only a bye-law to prevent misuse by keeping a Rupees Two Thousand cap on authentication less transaction; however, no strong security measures are being made by Central Banks. Further, the magnetic strip cards are disbanded, bank have started to issue Contactless Cards altogether; irrespective of the need or desire of the customer. It has led to a great grievance amongst investors especially of the age group above 40 years. The banks are making excuses to push the contactless cards and creating hoax that traditional cards would not be effective, they will be worthless etc. however in truth, the traditional magnetic strip cards would be still in use, but the transaction limit would be set up to rupees two thousand only.
Electronic Fund Transfer Act (EFTA) is the federal law that governs all the financial transactions using plastic money or e-commerce in the United States of America & on the same footing Indian Parliament has drafted an act called as “The Payment and Settlement System Act, 2007.” The act has several classical features to tackle the present scenario in Indian Financial World.
The key areas of the act are:
Discretion of the RBI to make Committee to authorise and supervise payments
Authorisation of Payment Systems
Regulatory and Supervisory powers of the RBI
System Providers, duties & powers
Dispute Redressal Mechanisms
Classifications of penalties for default, fraud or misuse of sensitive information & other offences.
Even after such a regulation the banks are still seen to be working as loose canons and issuing cards without consultation of the regulators or marginally using grey marketing strategies to lure customer base. Several customers are facing irritation and agitation as the banks are forcing them to use the newly formed contactless cards instead of traditional ones.
Future of contactless cards: India is a country of mass opportunities. Similarly, financial world is also quite dynamic in India. Prior Demonetization, no one had wondered that digital wallets, smart cards, plastic money etc could be used so widely and extensively. But with just one stroke of legislative amendment, the government brought us all towards the edge of discarding all the currency transactions and accepting the e-commerce methods to pay the bills. Below are the areas in which we could expand the horizon of the contactless cards in near future.
Fast food joints
Many a time we struggle to keep the adequate change, we don’t have the required cash, we are bored to stand in ATM que etc. so to change all this, we have to carry this plastic money/cards and just swipe whenever we are needed to make payment. The above are the areas where we spend less than rupees two thousand. Hence a special card for such transactions would solve all the solvency issues.
Security Features that could enhance the confidence of the customers: safety and security of the deposit is the primary criteria which customer undertakes to decide his banker. Using various latest software and technological advancements the banks are providing secured gateways. EMV chip cards have a unique feature that they cannot be duplicated like the magnetic strip cards. Also, two-way verification, OTP, PIN etc improve the security protocols. A secured customer is a happy customer.
Are you aware of contactless debit/credit cards?
Is your bank providing contactless debit/credit cards?
Do you feel safe using contactless debit/credit cards?
Do you think contactless debit/credit cards have prosperous future?
Are you aware of safety guidelines to use debit/credit cards?
Did your bank force contactless debit/credit cards on you?
Thus, we could see from the following summary of Questions (a), (b), (e) and (f) that irrespective of the fact that whether the customers are aware about the contactless cards or not; bank is aggressively dumping the card on the customers against their will. Also, no awareness campaign has being instigated by the bank to spread the knowledge about the contactless cards. Banks threaten the customers that their magnetic strip cards would be invalidated from an effective date and also, they would be blocked. Such unethical practices are being frowned upon and banks are facing suit for malicious treatment to customers and spreading false information affective decision making of the investor. Such are serious cases of misrepresentation making it offence considering the fiduciary responsibility banker has towards his investors.
As you can observe in the above diagram that the majority of the public is aware about the contactless cards, digital wallets or plastic money through the advertisement made by Apple pay, Fitbit pay or Samsung pay. Private companies have now stated to launch their own digital wallets to make it possible to attract crowd to their apps and also provide a one go click payment gateway. The starting of the contactless cards was by Samsung Pay which through its Galaxy S8+ smartphone had launched tap to pay feature. Now even Google Pay app uses the same level of technology to make payment to nearby peoples. Still the rate at which the investors are moving towards such gateways are at snail’s pace. [image: C:\Users\vibhav\AppData\Local\Microsoft\Windows\INetCache\Content.MSO\F2B765EF.tmp]Clearly as many as 37% of the sample isnt aware as of whether their bank is providing them the service of the contactless card. This is because the bank is not involved in aggressive marketing of the featured card. However the 42% people who responded yes are the samples who have recently opened their bank account or have being given a new contactless card by the bank in recent time. And the left universe is still ignorant about the development in the e-commerce payment systems. Its is hence to be seen that the customers are being made aware about the ongoing trends. This may be done by:
Mail: sending across mails to all the customers. Such a signature mails should include all the relevant details about the card and along with it its image and descriptions. Also the mail should contain a link to the YouTube channel of RBI where it has made a video stating all the key components of the cards, Do’s & Don’ts and also the safety guidelines. Finally a safety manual should be accompanied in the attachments stating precautionary measures undertaken by the customers.
Advertising: hoarding on the street, bus, bridges etc that catch an eye of the customers are effective tool to generate awareness amongst the public. Spots selected should be such that they will be easy to spot, attractive and also efficently selected to ensure attention span of larger audience.
Banners on site of each branch are method of cheap and passive advertising. People become aware of the hoarding once they are in the branch waiting for the banker to attend to their query. Also a help desk could be established so as to guide them in proper way.
Direct Commercial Messaging: Direct bulk messaging to the customers so as to generate a buzz. Sometimes inviting them to the branch and directing them to the card enrolment. Its an ongoing process and will be requiring a frequency in the campaign to make it successful.
On-Site Demo: the customer should be invited to the home branch and a demo about the operation of the card should be given to him. Also the information should be stated patiently and in a manner where any normal customer would understand the concept, functioning and the operations
Moreover the manager has to ensure that the advertisment is not over the limits causing customers to feel irritated or unsecured about using either traditional or new contactless cards. Balanced advertisement campaign strategy should be implemented.
RBI has made it a mandate to all the banks that while issuing any card, a standard broucher as to “how to keep the transaction safe” guidelines are to be provided. Standard drafted publication is then send across all the channels to the investor. Hence, over 55% of the universe knows the safety features. Few are still ignorant about the protocols and that is the reason why there is occurance of cyber offences. 45% of the sampel survey are not aware about the safety guidelines.
Many people have habit of writing the PIN on inside cover of ATM cards or on the card itself which makes it even easier for the theifs to steal the money from the accounts. This was pretty basic example of the negligence as a part of the customer.
The sample suggests that the bank did not approach them with the offer to enrol for the new contactless card. As they were not aware of the fact of existance of the cards (as no effords from their banks are being made to promote) the result is biased towards bankers nor using shady market practices to push the sale of contactless cards. However certain customers feel that they are being targeted by the bank and the card is being pushed to their disposal using various carrot and stic theories. Few of them being :
The old card would be discontinued or be inoperational
RBI has made rule to forbid use of magnetic strip cards
They directly send the new card at the address of the customer accompaning with letter stating that older cards is to be returned.
This is a serious allegation that many of the reported law suits are suggesting. That the bank has mis-informed the customers about the traditional magnetic strip cards being discontinued and forced them to enroll for the contactless cards. We are now on verge of making it a mission to stop banks from promoting cards using such a strategies.
Having countless potential and opportunities, the bankers should not indulge into unfair practices to boost the product. The Indian public is still in its early cradle stage to adopt digital marketing pratices. However effords are to be made so as the small scale daily transactions like FMCG, Grocery, Railway Ticket, Movie or Shopping etc could be easily handled by the contactless card (just one tap and paid!). Many companies have issued their own digital smart cards so as to push the innovation into the market. For eg. Fitbit has a scan option installed in its own fitness band so as to allow the user to store the card information into the band and scan accordingly. (thus the athlete wouldn’t need to carry his wallet when he is on routine jogging.) Sometime we don’t even need to carry the card as the image of the card is stored in the smartphone, all we need to do is scan using the phone. But all we need to do is allow the public to adjust to the speed of technology. Excess hurry would cause chaos, panic and leading to too many frauds, theft and simphoning. Respect the adaptability and welcome to the new age of digital advancement.