Contactless Payment Technologies

Group Members:
Haritha Girishankar Nikila Pranav Parvathi Rahul p

Topics to be discussed
Introduction How do they Work Contactless Payment technology in India. Benefits of contactless payment Key challenges Issues/Problems associated with contactless payments. Suggestions Conclusion

Research Problem And design

Research problem
To study and understand the significance and key challenges of contactless payment technologies adopted by banks.

Research Design
Exploratory research design is used to get an insight about the research problem - Secondary resource analysis method was used to collect data.

CONTACTLESS PAYMENT
Contactless payment systems are credit cards and debit cards, key fobs, smartcards or other devices that use radio-frequency identification for making secure payments. The embedded chip and antenna enable consumers to wave their card or fob over a reader at the point of sale. Some suppliers claim that transactions can be almost twice as fast as a conventional cash, credit, or debit card purchase. In a contactless payment transaction, the consumer holds the contactless card or device in close proximity (less than 2-4 inches) to the merchant POS terminal and the payment account information is communicated wirelessly (via radio frequency) With contactless payments, financial institutions can increase transaction volumes by capturing transactions typically made using cash. In addition, they can differentiate themselves with innovative new form factors to enhance loyalty and retention.
4

HISTORY
Mobil was one of the most notable early adopters of this technology, and offered their "Speed pass" contactless payment system for participating Mobil gas stations as early as 1997.

Major financial entities now offering contactless payment systems include MasterCard, Citibank, JPMorgan Chase, American Express, Key Bank, The Royal Bank of Scotland Group, Barclays, Barclaycard, HSBC, Lloyds Banking Group and The Co-operative Bank.
The first contactless cards in the UK were issued by Barclaycard in 2008. As of May 2013 there are approximately 32.5 million contactless-enabled cards in circulation in the UK and over 147,000 terminals in use .

Tap and Go technology.

Look out for the Wave sign while making a transaction. The merchant enters the transaction amount and the contactless card reader prompts the cardholder to present their contactless card. Customer must hold the device in front of a sensor, usually on a Point of Sale (POS)terminal .
- Smart chip and antenna in the device transmits a unique code to the sensor.

After the transaction is complete, the consumer either hears a beep or sees a flashing light - The transaction goes through the sponsoring networks (MasterCard, Visa, etc ) system to be cleared and settled. The purchase is complete. a signature or PIN may be required in case of amount equal to RS.1250 or higher amounts.

COMPANIES USING THEM

First issued by Exxon Mobile in 1997
Speedpass is used at gas pumps Still used today

Today
American Express ExpressPay MasterCard Paypass Visa Visa Wave

CONTACTLESS PAYMENT IN INDIA

Citi banks joins mobile and credit card partners to launch Indias first contactless payment solution. A full feature mobile payments solution where the credit card has merged into a hand phone. At present Citi bank India has 2.5 million card holders in India, of which 400,000 are in Bangalore. Already 20,000 card holders in Bangalore have a Nokia 6212 mobile phone with Vodafone connection and are eligible to use the new payment system. The pilot scheme involved 500 plus local traders, 5000 users, equipped

with Nokias NFC enabled 6212 phone .

Fuelled by mobile services from Vodafone, and by MasterCards.
10

Citi contactless payment stickers

Contactless payments can also be made using Citi contactless stickers.
The stickers, which use chips from France-based Oberthur Technologies, enable consumers to make payments of up to $50 at the point of sale.

The stickers link to customers' credit card accounts.

These special stickers with a built-in payment technology can be affixed to any object you regularly carry with you (for example, the rear cover of

your mobile phone).

11

Mobile Wallet
Mobile wallet was first launched in Kenya.

India is the 2nd market after Kenya where Bharti Airtels subsidiary
Airtel Money has launched a pilot initiative in Gurgaon, Haryana.

The success of this product in the trial period will determine its adoption by various operators and launch in other circles.

Airtel has tied up with various retail outlets. Companies like Its Cash are about to launch their wallets shortly.

12

Future
Mumbai Metro One Private Limited (MMOPL that will implement and operate the project, will soon roll out over 5 lakh contactless smart cards (CSC) and 4 lakh contactless smart tokens ( CST). Non-personalized smart cards will also be available. These can not be blocked and replaced; this type of CSC is like a currency note, which is transferable and can be used by any person who lays his hand on it. According to the guidelines of the Reserve Bank of India, the balance on the CSC can be up to Rs 10,000 It can be used as a multi-purpose card for all transport services which operate on automated fare collection (AFC) technology

13

Benefits of contactless payment

1) For business/ Retailers Operational efficiency competitive differentiation cost saving Easier reconciliation customer satisfaction

2)

For customers convenience and ease of use safety and security flexibility of alternate form factors. quicker transaction

14

Customer attitude towards contactless payment

In August 2006, Javelin Strategy & Research collected data about consumer experience with and attitudes toward contactless payments.

15

Consumer motivators for using contactless payment

According to the results of the Javelin survey the responses clearly indicate that the strongest motivator for such use is convenience

16

Key challenges
Securing the valuable information's of the customers is the major concerns about this technology. Creating awareness among the customers about the NFC Convincing people to use the New technology which contrasts to the earlier lessons thoughts about the importance of PIN ,Secret codes etc by the banks. it is feared that having this much information available "in the open air" will lead inevitably to problems. Mobile payments is a complex ecosystem with many players and success of each players depends upon the joint action by all the players. He biggest obstacle to commercial adoption has been merchant acceptance of the new platform, which requires them to purchase and install RF reader terminals and pay higher costs per transaction than with traditional magnetic stripe cards.

Acceptance by the SME s as additional costs are involved and Ambiguous ROI . 17

18

19

20

Problems / Disadvantages
Devices can be read from a few inches to a few feet away increasing the risk of fraudulent use. The loss or theft of contactless cards - In the case of low value payments , contactless payment technologies will remove the need for the consumers to authenticate every payment using their PIN number supplied with their card. - Consumers will be able to make a number of low value payments until a ceiling limit is reached
21

Problems / Disadvantages (cont)

Contactless cards are more exposed than regular credit cards.
A thief armed with a suitable reader, within a few feet from you, would be able to interrogate all of the cards in your wallet or purse without your knowledge. A regular credit card transaction is fairly secure; the magnetic strip is swiped at very close range (less than a millimeter). Mischarging Instances reported by customers ie a few customers have reportedly had payments charged to the wrong card or been charged twice due to contactless cards being inadvertently debited (UK)

22

23

SUGGESTIONS
Enable Watch(Gear), Mobile phone alert etc.
Enable the service of mobile phones and other gadgets to get notified every time when transaction occurs.

Lower SME Rates.

Banks who provide the service likely to join hands with the retailers and make the SME rates lower to the customers.

Choice of outlets.
Customers should try to choose various outlets only from where they will conduct the contactless payment.

Customize Maximum amount.

- The customer can make some customized figure as the maximum limit for every transaction done through contactless cards.
24

25

Conclusion

Contactless payment technology is the latest technology that is more likely to make banking more simple .

It provides a lot of benefits for issuers, consumers and merchants. There are many issues and challenges associated with the adoption of technology which is common to almost all kinds of Technological banking techniques. The future of contactless payment is still uncertain in India , though the benefits are clear. The lack of consumer awareness and the lack of confidence in security means are one of the main challenges. Unless these barriers are broken, contactless payment will be at risk of not showing its full potential. Protecting ones identity i.e. keeping the payment card safe can help in preventing any kind of fraud.
26

References
http://www.independent.co.uk/money/spend-save/contactless-cardsthe-pros-and-cons-of-new-payment-technology-1968747.html http://www.thehindubusinessline.com/industry-andeconomy/banking/soon-just-wave-your-card-andpay/article4772775.ece http://www.business-standard.com/article/finance/citibank-launchesnext-gen-mobile-payments-in-india-109070100008_1.html http://articles.economictimes.indiatimes.com/2012-0528/news/31877090_1_payment-mode-contactless-card-basedpayment Www.citibank.com

27