“One in six face-to-face transactions is contactless in India,” said Ramakrishnan Gopalan, vice president and head of products and solutions, Visa India and South Asia.
Visa is not the only entity experiencing such growth.
Furthermore, contactless payments include more than debit and credit cards designed to remove contacts from offline payments.
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Contactless payments include all forms of cashless transactions that do not require the user to swipe a card and enter a 4-digit pin code at point of sale (POS) terminals.
These transactions can be made using NFC-enabled cards and NFC-enabled mobile wallets, such as Samsung Pay. Even payments made by scanning a QR code are contactless payments.
According to Pine Labs, the overall number of contactless transactions in India increased by 171.9 percent and by 200.4% in rupee terms between May 2021 and May 2022.
QR Scanning and Dynamic QR Payments saw the highest increases of 245% in rupee-adjusted terms and 231% in transaction volume.
Payments company Fiserv also recorded 300% growth in UPI payments and 90% growth in contactless card payments over the past 12 months in India.
Rishi Chhabra, country head and general manager, India and Sri Lanka, Fiserv, said: “Broad-scale consumer adoption has prompted major banks to expand their contactless product portfolios. through virtual and contactless cards.
Gopalan attributes the growth in contactless payments to the Treasury Department’s guidance on issuing more credit and debit cards that support it and the Reserve Bank of India’s (RBI) decision to increase limit for such transactions 5,000 in January 2021 from 2,000 ago.
Most industry experts agree. “The ubiquity of contactless POS machines and rising limits have fueled significant growth in contactless payments,” said Ashutosh Sharma, vice president and research director at Forrester Research. .
The biggest driver is ease, and the biggest obstacle is people’s fear of the safety of payments, says Sharma. “In any case, pandemic or not, this growth will continue,” he added.
The Visa report also shows that contactless card payments receive the most interest in quick-service restaurants, food and grocery, movie theaters and pharmacies.
Bengaluru, national capital region, Hyderabad, Mumbai and Chennai saw the highest number of contactless transactions. “This has shown more traction in stores and fuel stations, where there are more people queuing and longer checkout times mean people have to wait longer in queues,” said Gopalan.
Although these payments do not require the user to enter a pin code, Gopalan still ensures their security. He explained that the contactless card uses a microprocessor chip and encryption to secure two-way communication. This makes card cloning impossible.
For banks and companies like Visa, contactless payments also help build a loyal customer base.
“The main benefit of contactless is that it creates stickiness. We have data from India and other markets showing that contactless promotes repetitive behavior and leads to loyalty for banks and companies like us,” Gopalan added.
Gopalan says raising the ceiling could also boost adoption.
“As a network, we feel there is still a lot of room to grow in Limit 5,000 while we work with the RBI to increase the limit,” he added.
Sharma believes that the biggest threat to credit cards as an instrument is coming from the growing adoption of UPI and making payments through UPI to credit. “It is also an opportunity; The easiest way to make this payment is to have a credit card linked to UPI. This will combine the ease of UPI with the value that the credit card ecosystem offers,” said Sharma. This means making another form of contactless payments, via QR code scanning.
Contactless payments are growing in India, but there is still a long way to go. In markets like Singapore and Australia, contactless payments account for 70-80% of transactions, according to Gopalan.
