It has been a few years since the Reserve Bank of India (RBI) had allowed financial institutions and merchants to use contactless credit or debit cards for transactions. However, several customers are still apprehensive about using such contactless cards, especially about payment being deducted from their cards for transactions initiated by someone else.
Let us see how these contactless cards work in practice. While everybody refers these cards as contactless, what they really mean to says is, cards that can be connected through wireless technology. Or simply, there is no need to insert the card in to the machine and then type your personal identification number (PIN) to authenticate the transaction.
In contactless card payment transaction, all you need to do is to tap your card on the machine for any transactions valued up to Rs2,000, and wait for the green light or beep sound (for acceptance of payment). That’s it. In addition, as per the guidelines issued by the RBI, you or your bank or the card issuer can limit the amount per transaction or the number of transactions per day.
Contactless card is quite useful for small value transactions. Anywhere you see the contactless symbol at checkout or billing counter, you can simply tap to pay. Many fast food restaurants, petrol pumps, malls, convenience stores, pharmacies, and theatres, among others accept contactless card payments up to Rs2,000.
However, for transactions of over Rs2,000 you will have to use the chip and PIN system, as per the RBI directions.
Now let us see the security angle. According to Visa, one of the global payment network services providers, contactless cards are as secure as any other chip card. "They carry the same multiple layers of security, which ensure that you are safe from fraudulent or unauthorised transactions. Contactless cards work when the card is within 4cm of the card reader and the contactless payment terminal can only process one transaction at a time. Because your contactless card does not leave your hand during the transaction, you remain in control of your card at all times," it says.
Many customers who are not aware of this aspect feel that someone can misuse their contactless card and deduct money for transactions not initiated by them. However, this fear is misplaced. As Visa has pointed out, the card remains in the hand of the customer and this system works only when this card is within 4cm to 6cm from the machine. In addition, the cashier at the billing counter will have to put in the amount in the terminal to activate the reader before the card can be tapped.
One thing should be clear here. The contactless card has a built-in antenna that responds to the reader signals emitted by the reading machine and then transmits encrypted signal back to the reading machine through radio waves. So the wallet, which has the contactless card, needs to be placed within 4cm-6cm to complete the transaction. This means you do not need to take out the card and tap it on the reading machine physically.
Also remember, there is no battery in the contactless card so you cannot turn it off.
Having said that, if you have more than one contactless card, then in such cases, you will have to physically tap the reader with the card. Otherwise, in such case, payment would be deducted from the card that is closer to the reading machine.
In addition, the RBI has issued guidelines for banks and card issuer companies on providing a token that can be used to perform card transactions in contactless mode at point of sale (POS) terminals, or quick response (QR) code payments. The 'token' refers to replacement of actual card details like primary account number (PAN) with a unique alternate code, which would be unique for a combination of card, token requestor and identified device.
These tokens can be used for mobile PoS transactions, in-app purchases or online shopping. Talking about benefits of tokenisation, MasterCard says, “Tokenisation reduces fraud related to digital payments by making transactions more secure by including a dynamic component with each transaction. It takes the security of a physical EuroPay, MasterCard and Visa (EMV) chip and applies it to non-card environments including proximity and internet payments.”
HDFC Ltd, India’s premier housing finance company has disbursed subsidy amounting to over Rs2,300 crore benefitting over 1,04,000 families under the government’s flagship housing scheme - Pradhan Mantri Awas Yojana (PMAY).
The corporation has approved Rs22,136 crore of home loans under the Credit Linked Subsidy Scheme (CLSS) to homebuyers belonging to the economically weaker section (EWS), Low Income Group (LIG) and Middle Income Groups (MIG), HDFC said in a statement.
The housing finance company has partnered with the Ministry of Housing & Urban Affairs and the National Housing Bank to work towards the government’s goal of “Affordable Housing for All”
“The government’s PMAY scheme is a growth accelerator programme that aims to provide affordable housing to people in the country. The thrust on housing is a recognition that a rapidly growing country like India with a large young population needs more affordable homes. The government has rightly incentivised all constituents in the housing chain – be it developers, borrowers and lenders in order to make India a property owning democracy,” said Renu Sud Karnad, Managing Director, HDFC Ltd. She further added that people should take advantage of this scheme at the earliest as the ones for the MIG category are only available until 31 March, 2020. In this regard, HDFC has also engaged with developers and channel partners to reach out to eligible beneficiaries.
During 2018-19, the housing finance company has approved 37% of home loans in volume terms and 18% in value terms to customers from the EWS and LIG segment. On average, the corporation has been approving 8,600 loans on a monthly basis to the EWS and LIG segment, with such average approvals at Rs1,460, they said in a statement. The average home loan to the EWS and LIG segment stood at Rs10.1 lakh and Rs17.5 lakh respectively.
CLSS, which was introduced in June 2015 under the PMAY for EWS, LIG and extended to MIG from January 2017, gives borrowers an interest subsidy of 6.5% per annum for loans up to Rs6 lakh for EWS and LIG category (annual household income up to Rs6 lakh). Interest subsidy of 4% and 3% are provided for loans up to Rs 9 lakh and Rs 12 lakh, respectively, for MIG category for a maximum tenure of 20 years.
The effective subsidy to customer is in the range of Rs2.30 – Rs2.67 lakh on a 20 year term, receivable upfront. The schemes for MIG are valid up to March 32, 2020, while the plans for EWS/LIG are valid up to March 31,2022.
If you are a growing business or want to widen your reach by tapping into the online market then you must be able to accept credit card payments. By accepting credit card payments your business can witness up to a 40% boost in sales. So, put the right software and hardware in place so as to ensure that your client's data security is maintained while making online credit card payments.
You can also choose a credit card of your own, such as the Bajaj Finserv RBL Bank SuperCard. This card offers your business the ability to overcome short monetary requirements, such as clearing supplier dues or buying needed inventory, with instant financing. You can save money with each purchase and convert purchases above Rs.3000 into easy EMIs. This apart, you can get the power and benefits of ‘4 cards in 1’ with this card and use it as an EMI card, a loan card, a cash card and a credit card, as per your needs. You can avail an emergency interest-free credit card loan on your existing credit limit and withdraw interest-free cash from ATMs. Apart from this, you can earn rewards, cashbacks, and discounts for a range of purchases and transactions.
In order to accept credit card payments, you should begin by following these steps.
Starting a merchant account
You can set up a merchant account at your local bank. This will allow you to accept, process, and receive funds from credit cards and debit cards payments made online or using the card machine installed in-store. This merchant account facilitates the movement of funds from the cardholder’s account to your business account.
Selecting a merchant service provider
When selecting a service provider, you must consider the tools and solutions offered by various providers. Choosing the best on offer will ensure they help you run your business transactions smoothly. Also, while selecting a provider make sure that they give you access to the best customer support in a timely fashion. Know how the support will be delivered, like through text, e-mail, chat, online documentation, etc. A good service provider will also ensure that you meet and maintain the security standards laid down by the Payment Card Industry (PCI), which is the central authority across the globe monitoring all payment-related activities. Also, while selecting the provider, check how they are charging you for your online credit card payments. Based on pricing, the two most common providers are tiered pricing merchant service providers and interchange plus merchant service providers.
Now that you have understood the basics of setting up a merchant account and selecting a provider, read on to know how online payments are enabled.
How to accept credit cards for mobile sales
To accept payments via credit cards through mobile, you will need a mobile credit card reader set-up in your smartphone or tablet. Also, to start with, you must ensure that your chosen merchant account is ready to handle mobile payments. The card reader connects your smartphone or tablet to your merchant account, that in-turn allows you to accept credit cards of every kind, whether they are chip cards or electronic strip cards that you need to swipe, e-wallets or contactless cards. The risk of fraud for mobile sales is lower as you can see the identity of the holder along with the physical card or information and thus the cost of maintaining this service is lower too.
How to accept credit cards for online sales
This requires you to have a secured e-commerce platform enabled with a proper checkout arena and a secure payment gateway channel. You can choose an all-in-one solution from your service provider that includes a payment gateway too. The gateway secures your clients’ credit card information and sends it over the internet for your approval upon which the transaction is completed. The funds are deposited generally within 1 or 2 days directly into your merchant account. Since online sales have a higher risk factor as it involves verification and payment gateway assessment, the fee for such a credit card payment is relatively higher.
How to accept a credit card for in-store sales
To accept credit cards for in-store sales you require a retail point-of-sale system, which is commonly known as a POS. This payment system allows your customers to complete payment for their purchases using their cards in physical form. Also, you on the other hand, can not only accept cashless payments, but basis the system track inventory, manage staff, connect in-store and online sales and do much more at the backend. In order to put this credit card system in place, you will need a credit card reader or a card machine.
Equipped with this payment guide, boost your business with the ability to accept credit card payments. As a business owner, you can also take a step towards empowering yourself by applying for a credit card like the SuperCard. To begin with, check your pre-approved credit card offer today and enjoy the benefit of 4 cards in 1 right away!