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Explained: Your Credit Card Now Becomes Even More Powerful For Contactless Payments

Credit cards issued by all banks in India offer the contactless payments feature, and this is applicable for all types including Mastercard, Visa and American Express credit cards. (Image for representation)

Credit cards issued by all banks in India offer the contactless payments feature, and this is applicable for all types including Mastercard, Visa and American Express credit cards. (Image for representation)

You can now utilize the contactless payment method for your credit card payments and not have to enter a transaction PIN for purchases up to Rs 5,000 at stores. Cards issued by banks in India offer contactless payments feature, and is applicable for Mastercard, Visa and American Express credit cards.

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Vishal Mathur

Starting 1 January 2021, your credit card can be used for contactless tap and pay transactions for an even higher amount than before. The Reserve Bank of India (RBI) Statement on Developmental and Regulatory Policies released on December 2020 further relaxed the requirement of additional authentication requirement for credit card transactions. Users now utilize the contactless payment method and not have to enter a transaction PIN for transactions up to Rs 5,000 at physical stores. Earlier, the limit for non-PIN required contactless transactions was Rs 2,000. At this time, cards issued by all banks in India offer the contactless payments feature, and this is applicable for all types of credit cards including Mastercard, Visa and American Express credit cards.

What you need to look for is the contactless network symbol on your card, something very similar to the Wi-Fi icon in the notification bar on your smartphone. If you see that anywhere on the front of your credit card, that means it is enabled for contactless payments at physical retail outlets and stores. If you don’t, chances are your credit card is very old and you can contact the issuing bank for a new one. In addition to your credit card, the payment terminal at the store you are making the payment needs to be enabled for contactless transactions. Chances are, most shops and stores now have that functionality integrated in their payment machines. At least the bigger stores do and expect this functionality to be available at even more stores in the coming months. This contactless payment technology works on Radio Frequency, or RF, and the Near Field Communication (NFC) technology. This is very similar to the RFID tags but are more secure because the financial transaction and the information needs to be secure. There are microprocessors doing cryptographic processing to scramble and protect your credit card details as well as the transactions specifics.

For the contactless credit card transactions to happen, the card and the payment terminal or machine need to be less than 4 centimeters apart from each other. That negates any chances of ghost transactions happening in case you are standing a short distance away from a payment terminal. Also, a payment amount for a transaction needs to be entered into the machine by the vendor and the transaction as well as the unique transaction code needs to be authenticated by your contactless credit card with the embedded unique chip. The biggest advantage is—you do not need to enter a transaction pin in this case, and that negates the need to hand the card to a human at a payment counter in a store or touch the payment machine to punch in a four-or six-digit transaction code for your credit card to complete the purchase. And neither do you have to dip your hands in potentially germ laden cash notes. Simply tap the card on the payment terminal when the system is ready to complete the billing, and you are done.

“These are also well-suited to make payments in a safe and secure manner, especially during the current pandemic. The recent instructions on disablement of contactless feature on cards and empowering customers to control the limits on their cards have also brought in added safety for users,” says RBI. This rule will be applicable from January 1, 2020. It comes as part of the Reserve Bank of India (Digital Payment Security Controls) Directions, 2020 for regulated entities to set up a robust governance structure for such systems and implement common minimum standards of security controls for channels like internet banking, mobile banking, card payments, among others.

You do need to be careful about how you make the transaction with contactless payments. If you have more than one credit card with contactless payments option in your wallet, it is recommended you don’t touch the wallet on the payment terminal or machine—instead take the specific card that you want to use out of the wallet and make the contactless payment. Banks also insist that you cannot be charged twice for the same transaction, even of you tap the card on the payment terminal twice by mistake. For payments above Rs 5,000 at physical stores, you will still have to use the chip authentication plus punching in the transaction PIN for your credit card to complete the payment.


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