With 20 million NFC cards, VISA bets on contactless card transactions

Card network VISA said that the company is betting on Near-field communication (NFC) technology to push digitisation in the country. VISA claims to be the market leader in NFC cards with over 20 million NFC cards against an industry estimate of 30 million cards.

The company said that the infrastructure for contactless card transactions is now building. “There are one million Point of Sale (POS) terminals, which are contactless-enabled, forming approximately 30 per cent of the total POS terminals in the country and the network really kicks in when you get this kind of scale,” said Murali Nair, Head of Business Development, Visa India. As per October Reserve Bank of India data, there are a total of 3.45 million PoS terminals in India.

Nair added that contactless cards will soon become a national phenomenon as the existing cards are not geographically concentrated.

Contactless payments allow a user to simply tap her card to make a payment, removing the need for typing a PIN number if the transaction is below Rs 2,000. However, both the card and the POS terminal need to be NFC enabled.

While the acceptance infrastructure is building, customers have still not warmed up to NFC transactions. Only 2-3 per cent of card transactions are contactless, say industry estimates.

Banks also believe that the infrastructure on acceptance side has to be built before the technology picks up and most of the new cards issued are contact-less-enabled.

All terminals have a three-year life cycle and they have to be replaced with a new terminal, most of which are now NFC enabled, said VISA, adding that an NFC terminal does not cost more than a normal terminal.

VISA has partnered with various fintech players to push merchant acceptance in rural areas. However, the company is first focusing on segments that will pick up the technology faster.  

“We are making sure that the categories that are pushing the envelope on contactless payments are covered first and most of the quick service restaurants, grocery and department stores are already contactless. These are the places where young customers are most likely to use contactless cards and become an example for others to follow, said Nair.

Nair added that contactless cards could help reduce the number of cash-on-delivery transactions and that VISA is in talks with food delivery startups to provider riders with POS terminals. The company is also working on solutions for using a mobile device as a POS terminal.

While VISA is also exploring other technologies, Nair said that the next year would see a lot of growth for NFC transactions.