Pros and cons of contactless bank cards

In this article, I will explain about the advantages and disadvantages of contactless credit and debit cards and the method of their working as these cards are gaining popularity with each passing day in India.

Before the debit and credit cards era, we used to see a lot of cheque and cash transactions. But as the technology grew up, the term named 'plastic money' came into existence. Plastic money refers to the plastic cards as a substitute to currency notes. We can notice a plastic card in every individual's hand nowadays. We have been seeing revolutionary changes in our day-to-day transactions from the arrival of these credit and debit cards. Similarly, some technical as well as security problems can also be witnessed while utilizing such cards. To wipe out these problems as it is claimed, contactless debit and credit cards were introduced. ICICI Bank initially introduced such cards in India. It was later followed by SBI and Axis Bank. Once the customers get familiarized with such new type of cards, many more banks will follow suit.

How do contactless bank cards work

While using contactless cards, we need not swipe the card in a card reader machine. It works just by positioning the card near the card reader machine. So any physical touch is not required between the card and the machine. Contactless cards look very similar to normal plastic money cards, except having on it a small radio symbol very much similar to a toppled WiFi symbol. These cards work with radio frequency identification (RFID) based Near Field Communication (NFC) technology for its connection establishment. Since the card works on a weak radio wave, it must be positioned within a distance range of 4 centimeters from the machine for making a payment. For some cards, neither is it required to enter the PIN nor is it essential to sign the receipt while making a payment amount that is within the permissible limit as notified by RBI from time to time. We can use the contactless cards as normal debit or credit cards when the point of sale (PoS) machine is not supporting the contactless transactions.

Advantages of contactless bank cards

  • Contactless cards work with double the speed as compared to normal credit and debit cards and hence we need not waste our time in long queues.

  • We need not deliver the card to the merchandiser to make a payment, thereby eliminating fraudulent transactions.

  • The card will always be within our sight while we make our payments.

  • We need not to move out the card from our wallet while making a payment. We can bring the wallet itself near the point of sale machine for completing the transaction.

  • The NFC technology can be linked to mobile phone applications also so that we can move our mobile phones around the card reader machines in order to make a payment.

  • It is very much convenient to merchants as there will be improvement in operational efficiency, low maintenance costs and removal of unnecessary headaches that arise while dealing with cash.

Disadvantages of contactless bank cards

  • There are some incidents in nations where they were introduced, wherein hackers were able to skim the data from the contactless cards by the use of mobile applications. Identity of the card holder can be stolen with the data thus acquired.

  • It will be arduous in the present situation to find contactless enabled merchant machines everywhere to make our transactions.

  • The permissible limit for PIN-less and signature-less transaction is set by RBI, so we may be asked to enter our PIN or put a signature on the receipt every time we cross this permissible limit.

  • There could be some accidental transaction happening when our card comes in and around the card reader machine unless proper security measures are implemented in the card for eavesdropping attacks.

  • When two or more cards are near the PoS machine, confusion may arise and incorrect payments can be executed by the merchant.

  • PoS machines can fail to detect the card if there happens to be a small damage to the card due to improper handling.

How can we ensure security from our side

For extra security, we can keep the contactless card in an aluminum foil or steel holder so that no information is leaked. Similarly, we should be thrifty enough while we enter our PIN in the merchant terminal. Extra cautiousness is required while carrying the card so that the chip present inside the card may not get damaged.


Author: Venkiteswaran17 Dec 2016 Member Level: Gold   Points : 3

This article has relevance now as the nation is discussing ways of going digital in financial transactions.

People are now aware and ready to go for digital methods in financial transactions. But there is an unexplained fear in them that scares them away from experimenting with new methods of payments and receipts.

Digital methods like contactless cards are having much more convenience, but have only the normal risks associated with any kind of routine matters in our life including driving, crossing a road etc. Accidents happen, but still we do not get scared. We take more precautions from what we learn from others experience and proceed. Prudence and caution can help us avoid much of the risks.

Author: K Mohan02 Apr 2018 Member Level: Platinum   Points : 3

The author did bring in a very good useful subject on which I want to throw some personal views which I had experienced. After opening the Post office savings account, an ATM card was given instantly. Normally we are used to have ATM card, debit card or even Rupay cards with name of the account holder printed on it and that seems to be very personalised and privileged. But the card given by Post office does not have the name but have the number and looks like same ATM card as given by banks. Now my question is with that short cut methods envisaged by Post offices, is there any danger for breaching or stealing of our data and the cards are kept open to the view of anyone in the post office staff. Is there any chance of misusing the data of the account holders after they had been issued the same card ?

Author: Umesh03 Apr 2018 Member Level: Diamond   Points : 4

A nice article illustrating the basics of contactless cards.

I will like to add here that whichever card is it - a conventional debit or credit card or the newly introduced contactless card, the card holder must ensure it's safety and security which is the most essential thing as hackers and fraudulent persons are roaming here and there.

Many people use these cards casually and carelessly and the cunning and timid persons hovering around take advantage of their negligence.

So advanced technology is one thing but there is no substitute for carefulness and alertness while using these facilities.

Author: DR.N.V. Srinivasa Rao07 Apr 2018 Member Level: Diamond   Points : 3

As the technology takes a leadership position many such things can be invented. We have seen days from going to a bank and drawing the money by filling withdrawal form to the cheques, then credit cards to the mobile apps and now these contactless cards. But the new way is having some or other problems which are being exploited by the foul play people? So the owner of the instrument should always follow all the safety precautions not to give scope for the erring people a chance. Somehow I feel the method of drawing money by a withdrawal form by personally going to the bank is the safest of all the various procedures available.

Author: Umesh08 Oct 2018 Member Level: Diamond   Points : 1

Whenever such new techniques are introduced, the clever hackers also find the way to break the extra security features.

Anyway, this appears to be a good alternative approach and in coming times the banks will make it more sturdy and safe in its operation. It all depends on how much popular this new type of card gets in the hands of the user and depending on that only the banks will aggressively issue it. Let us hope banks will devise more safety measures and provide ease of operation in this new type of card so that it gets a good feedback from the customers.

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