source: godsavethepoints.com

Contactless Payment: A Revolution in the Banking Sector!

Let’s be honest, it is psychologically painful to part with our cash. After all, it is the fruit of our sweat and blood. However, just like many other things, technology has provided a solution for anesthetizing this psychological pain too.

With the introduction of credit cards, the payments have turned digital, which means the cash in your wallet can rest, while the plastic money is put to work. But, bursting your happy bubble, when you pay with plastic, you are borrowing funds from the bank or the card provider.

You will then have to make repayment of this money, either in full at the month-end or gradually over time. Hence, in the end, you are making the payments out of your own pockets.
Nevertheless, these plastic cards have made payments much easier and convenient throughout the world, including the United Arab Emirates, of course. While the people in the Emirates took some time to accept this payment method, but when they did, the usage rate increased rapidly.

As if the introduction of credit cards in UAE wasn’t enough, the financial sector saw the launch of many mobile payment facilities including Apple Pay, Samsung Pay, and Google Pay. With these services coming in the spotlight, contactless payments are the current wave of revolution in the fintech. Many companies offer contactless credit cards. You can visit here to compare credit cards in the UAE based on different features and benefits.

As per a recent survey, the customers are using this contactless technology to complete various transactions, both huge as well as low-value regular purchases of around 100 dirhams on an average, accelerating the cash displacement in the economy.

Even when these “tap & go” payments have become popular in the UAE, some of the users are still doubtful about using such cards. While there are benefits of convenience and speed in making payments with contactless cards, such convenience has its own share of risks. If your card ends up with the wrong person due to theft or misplacement, then you may have to face losses due to fraud.

How do these Cards Actually Work?

source: clark.com

There is a specific chip embedded on these tap&go cards, which allow the usage of NFC (near-field communication). With this NFC technology, the compatible readers can authenticate transactions when brought close to the card.

There are a lot of banks in the UAE that issue both debit and credit cards with the tap & go option. The bank personnel claim that this feature is quite popular amongst their customers, and they have not come across too many complaints regarding the security of such cards.

Since you do not have to enter any PIN code, there isn’t any proper authentication, and the person who is in possession of the card is considered as its owner. This is where the risk lies. If your card gets stolen, the thief can make purchases through the tap & go feature easily. However, certain security parameters have been developed in order to avoid this.

Who will Bear the Loss?

Taking into consideration how popular this technology has become, the bankers say it is going to be on the center stage in the financial market. In fact, more banks are preparing to offer cards powered by this contactless payment options. Most of these come with comprehensive instructions on how to use them and what to do in case of misplacement or theft of the card.

It is advised that you always keep your plastic money safe just as you keep your cash. If you lose the card or if it has been compromised, you can instantly block its usage by calling the customer care number of the bank at any time of the day or through the banking app on your smartphone.

If you face a fraud on your lost card via the tap & go payment, you will be responsible for such a transaction, unless you successfully prove that there wasn’t any negligence from your end. You will also have to prove that you were not in possession of the card.

These risks sound scary, right? Yes, they are. You need to be very careful while using a credit card in the UAE. However, the banks have taken measures to protect you from huge losses through this technology.

The Payment Cap!

source: spaceo.ca

Generally, the payments made using this contactless technology have a certain cap or limit of a few hundred dirhams. Therefore, the potential loss occurred in the case you lose your card, becomes relatively small. All the payments made online need additional authentication before they get approved.

Most of the banks in the Emirates have set these payment limits between 100 to 300 dirhams. There is a probability of a thief robbing your contactless card and making various purchases through it; however, the risk here is comparatively lesser than a stolen or copied card used through a compromised PIN for making larger purchases.

According to the bankers, the risk of making various small transactions through a lost or stolen card is relatively low. This is because of additional security benefits like message alerts, which you receive as soon as a transaction is authorized.

In a Nutshell!

Even though this contactless feature of the modern plastic cards come with a risk of loss, the ease and convenience offered by this technology will help in maintaining its popularity amongst the users. The risk of security is relatively low in case of contactless payments, especially in comparison with other methods of payment like cash.

The contactless cards and digital wallets are the main reason for the rise in contactless payments and have led to the formation of a cashless society in the UAE.

We have come a long way in terms of money- from metal coins to plastic cards, and now, the contactless feature and digital wallets are in the limelight. The pace with which technology is growing, what can we expect next? If you have a groundbreaking idea or let’s call it a suggestion, then share it with us in the comment section.

About Peter Janos