The Reserve Bank of India’s (RBI) new credit and debit card guidelines, which came into effect from 1 October, allow you to turn near-field communications (NFC) on and off on your card at will. Several banks and card providers have been issuing NFC cards, but what is NFC and what does this change mean for you as a customer?
We’re used to seeing and using magnetic stripe cards, which store card data on the black magnetic stripe on the back of the card, but there are also EMV chip and PIN cards, where the data is stored in a chip embedded in the card, and NFC cards, which can be read by bringing the card close to a card reader. At points of sale (PoS), this allows customers to tap their card on the card machine to make the payment.
According to the RBI guidelines, transactions with a value of up to ₹2,000 can be made using NFC cards without the additional factor of authentication requirements. NFC cards are also considered safer than magnetic stripe cards.
How NFC cards work
NFC-enabled cards have a symbol that looks similar to a wi-fi symbol denoting their contactless feature. The NFC chip can make short-range data transfer without the need to be swiped by the PoS device.
“NFC transmits data via electromagnetic radio fields, enabling two devices to communicate with each other. In fact, NFC is beneficial in terms of simplifying and accelerating the payment process as well,” said Bhaskar Chatterjee, head of products, Ezetap. He added that passive NFC devices include tags, and other small transmitters, that can send information to other NFC devices without the need for a power source of their own.
RBI’s new guidelines for debit and credit cards are aimed at ensuring secure transactions as cases of fraud are on the rise. The guidelines allow customers to set their own transaction limits and opt in or out of facilities like enabling online transactions and NFC-based transactions.
“The new guidelines by RBI tries to maintain a balance between convenience and security. Offering cardholders an option to enable or disable the NFC feature puts across the message that the cardholder alone has the right to set her spending limit and the mode of payments she would prefer. This instills confidence in the customer’s minds about the nature of NFC payments—and that it is in the customer’s purview of control,” said Chatterjee.
Secure your payments
Although NFC-based transactions are considered secure, some raise concerns about theft via specially designed or rigged devices, like Radio-frequency identification (RFID) devices.
A few years ago, an image of a man holding a PoS device on a crowded train went viral, sparking conversations about whether it would be possible for fraudsters to take advantage of the contactless facility to capture your card data using such a device, without you noticing.
However, since KYC-compliant PoS devices are well documented and traceable, it is unlikely that authorized services or merchants would engage in this kind of fraudulent practice.
But it is still important to be careful when making transactions, as with any card or mode of digital payment. “Users should have OTP or PIN functionality enabled while carrying contactless cards. If possible users are encouraged to carry an RFID shield wallet to prevent unauthorized usage,” said Tushar Aggarwal, founder and CEO, StashFin.