Boon or disaster: Contactless credit and debit cards are finally here

Contactless debit or credit cards are nothing but usual payment cards. The electronic card has been debuted long back overseas and is now setting foot in India too. Present day credit and debit cards use the magnetic strips as well as a tiny contact-based chip embedded inside the card. When a payment needs to be mare, the vendor swiped the magnetic strip or inserts the card inside the payment machine to make the necessary transactions. The same goes with an ATM machine, which presently uses the magnetic strip on the bottom of the card. The magnetic strip and the chip inside the card holds all the data needed for the transaction, which includes the bank details, bank account and the pin code. Now the contactless card is gearing up to be debuted in India.

The contactless card is similar to the existing ones, but will make use of an RFID chip embedded inside the card, similar to an NFC chip. The RFID chip is a small circuit, which wirelessly transmits the data to the payment gateway terminal without the need to be swipes or inserted. The card needs to be tapped to the terminal or placed at a distance of a few inches from the payment terminal. The RFID can transmit the required data for the transaction.

“The new Reserve Bank of India (RBI) guidelines for contactless payments for transactions up to Rs. 2000 shall widen the scope of electronic transactions and payments on a regular basis. As per data shared by National Payments Corporation of India for March 2015, we have already witnessed mobile transactions worth Rs. 169 billion. This move will increase the number of payments via smart phones, tablets and other digital devices as well as bring convenience right on the palms of the consumers. Customers will be able to make small transactions, pay utility bills and other bills easily. It will boost the mobile commerce industry widely and expand the avenues for small business owners as it will broaden the scope of merchants who provide services at lesser costs,” says Kumar Karpe, Chief Executive Officer, TechProcess Payment Services Ltd.

Though the new form of payment will make it easier to transact using the RFID-based cards, as well as devices that use NFC, such as smartphones and tablets, will it be equally safer to the prior existing technologies? As for the older technology where swiping or inserting the card required to be physically done, an RFID chip can be read from short distance, and that too without the need of even removing it from your wallet or purse. There have been several reports of credit and debit card details being stolen without even physically accessing it. The video below shows a possibility where a hacker, with the use of some portable electronics placed inside a small bag, can steal your card details without any contact. All he needs to do is hover the electronic device over your bag or wallet and the data from the card is received by the device. Using the transmitted information, the hacker can rip you off easily. Credit and debit card skimming attacks are known in some countries, where the hackers were also able to skim card data using mere mobile phones.

Kumar Karpe added that “We are yet to see its execution. Banks will have to create awareness about such facilities. In an economy where customers are trying to go cashless, they will have to take further care of their credit cards and debit cards if such a card is stolen or lost. However, it is still unclear as to who shall bear the loss for an unauthorized transaction.”

So if your credit or debit card details are hacked, the thief can easily use the details to shop with the minimal amount, numerous times. Hope the RBI comes up with certain norms to avoid the issue of banking fraud. Presently, the existing transactions of up to Rs 1,000 also do not require a user to enter the transaction password, while using an online net banking payment or transaction.

Presently, SBI and ICICI are one of the first banking services to start the contactless credit and debit cards in India.