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Contactless payment technology

Through contactless payment, you can make payments by just waving your phone at a PoS terminal

Contactless payments are not new and have been around for the past 2-3 years in the country. Contactless payment means that you can make payments without the need to swipe or insert your card in a point of sales (PoS) machine. You can make payments by just waving your phone at a PoS terminal. Broadly, there are three kinds of technologies that allow you to do this.

Also called NFC technology, it allows you to make payments without the need to swipe or insert a card. All you need to do is tap or wave your card at a PoS terminal, which is NFC compliant. The technology allows devices to communicate within a distance of 4 cm. These transactions can be done using cards, tags or even stickers. For the contactless communication to happen, it is mandatory that both the devices—the card and the merchant’s PoS terminal—should be NFC compliant.

A working example of this in India is State Bank of India’s NFC-compliant Tap & Go Debit Card.

Also called HCE, this technology works with the Android mobile operating system. It allows you to convert your physical card, such as a debit or credit card, into a virtual card on your Android phone. To use this technology, you need to download an HCE-compliant app, which will allow you to convert your physical card into a virtual one. Once the card is virtual, you can use your phone to make contactless payments at any NFC-enabled terminal. An example of HCE is ICICI Bank’s contactless payment option on its Pockets app.

Magnetic secure transmission (MST) technology works by emitting a magnetic signal from your mobile device.

This magnetic signal can be read by the magnetic strip card reader on a traditional PoS terminal. As a result, most merchants would not have to invest in new hardware, as their existing PoS terminals would be compliant with this contactless technology. This is one of its big advantages over the NFC technology.

To use it, users need to save their card details on to their MST-enabled app. After that, save the detail of your card in the app, and then on it is just like using a virtual card. You can then wave your phone on the traditional PoS terminals to make the payment. Samsung Pay uses MST to enable contactless payments.

There are other technologies as well, which can be used to make contactless payments.

For instance, just like radio or magnetic waves, sound waves can also be used for the purpose. The industry is still toying with various technologies for contactless payment. So, it is too early to say which one will pick up pace.

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