DIGITAL AND CONTACTLESS PAYMENTS

TECHNICAL SEMINAR REPORT

Submitted in the partial fulfilment of the requirements for the award of the degree of Bachelor of
Technology

In

ELECTRONICS AND COMMUNATION ENGINEERING

By

SINGAMSETTY JAGRUTHI SRI SAROJA NAIDU

(Regd. No. 18PA1A04H3)

DEPARTMENT OF ELECTRONICS AND COMMUNICATION ENGINEERING

VISHNU INSTITUTE OF TECHNOLOGY: Bhimavaram.

(Approved by AICTE & Affiliated to JNTU Kakinada)

(Accredited NAAC & NBA)

2018 – 2022

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 VISHNU INSTITUTE OF TECHNOLOGY: BHIMAVARAM

(Approved by AICTE & Affiliated to JNTU Kakinada)

(Accredited NAAC & NBA)

CERTIFICATE
This is to certify that the Technical Seminar entitled DIGITAL AND CONTACT LESS
PAYMENTS is being submitted by SINGAMSETTY JAGRUTHI SRI SAROJA NAIDU
(18PA1A04H3) IV Year II Semester student, as a partial fulfilment for the award of the degree
of Bachelor of Technology in Electronics and Communication Engineering is a record of
bonafide work carried out by him/her during academic year 2021 – 2022 and it has been found
worthy of acceptance according to the requirements of the university.

SEMINAR EXAMINER 1 SEMINAR EXAMINER 2

III YEAR CO-ORDINATOR HEAD OF THE DEPARTMENT

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 INDEX
CHAPTER NO CONTENTS PAGENO
1 ABSTRACT 5
2 INTRODUCTION 6
2.1.Statement Of The Problem 6
3 OBJECTIVES OF THE STUDY 7
4 METHODLOGY 8
5 TECHNOLOGY 9
5.1 RF Technology Features 10
5.2 Contactless Smart Cards 11
6 TYPES OF DIGITAL PAYMENTS 12
6.1 Payment Cards 12
6.2 Unstructured Supplementary Service Data 13
6.3 Aadhaar Enabled Payment Service 14
6.4 Unified Payments Interface 14
6.5Digital Wallets 14
6.6 Point Of Sale Machines 15
6.7Mobile Banking 15
6.8Internet Banking 16
7 FUND TRANSFER 17
7.1 View On Digital Operations 18
8 GLOBAL ADOPTION 19
9 ECOSYSTEM OUTLOOK 20-21
10 INFRASTRUCTURE 22
11 SECURITY CAPABILITIES 23-24
12 BUSINESS BENEFITS OF CONTACTLESS 25-26
SMART CHIP TECHONOLOGY
13 ADVANTAGES 27
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 14 AWARENESS/SUGGESTIONS 27
15 CONCLUSION 28
16 REFERENCE 28

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 ABSTRACT

This paper explores the impact of contactless payment on consumers’

demand for cash at an early stage of diffusion. The specific devices that are investigated
are debit and credit cards, in which the feature is embedded. A novel balanced panel
dataset drawn from representative surveys on consumer payment behavior in the USA
from 2009 to 2013 is analyzed to account for unobserved heterogeneity in cash usage.
The results show that contactless credit and debit cards exert no statistically significant
effect on cash usage after controlling for unobserved heterogeneity. Consumers’ decision
to use contactless payment is an endogenous choice. Card-affined individuals replace
conventional card payments with contactless card payments. Hence, the overall effect on
cash usage remains unaffected.
The Information Technology (IT) has revolutionized the various
aspects of our lives; particularly it has provided an easy way to go for digital payments.
During the Demonetization period, the Government of India forced the people directly or
indirectly to do all commercial transactions via Digital mode. The common people started
to move from traditional payment system towards Digital Payments systems which
ensured safe, secure and convenience. With giant technological leaps in the smart phone
and easy internet access has led Indian market to accept Digital Payments. The percentage
of the digital payments through other modes is also increasing in a significant speed.
The objective of the present study is to know about the various types
of Digital payment transactions that are used by the common people in their day- today’s
lives. This study is chiefly based on Secondary data. Result indicates that the Digital
revolution has made the cash less transaction an easy one. As a result that in 2015-2016,
a total of 4018 billion has been transacted through mobile banking when compared to 60
billion in 2012-13. The reach of mobile network, Internet and electricity is also expanding
digital payments to remote areas. So, it is without doubt said that future transaction
system is cashless transaction.

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 INTRODUCTION
Digital payment is a way of payment which is made through digital modes. In digital
payments, payer and payee both use digital modes to send and receive money. It is also
called electronic payment. No hard cash (currency notes) is involved in the digital
payments. All the transactions in digital payments are completed through online. It is an
instant and convenient way to make payments. Currently available digital payment
systems include Banking cards, Digital wallets, Unified International Journal of Research
Available at https://edupediapublications.org/journals e-ISSN: 2348-6848 p-ISSN: 2348-
795X Volume 04 Issue 13 October 2017 Available online:
https://edupediapublications.org/journals/index.php/IJR/ P a g e | 2102 Payment Interface
(UPI), Unstructured Supplementary Service Data (USSD), Immediate Payment Service
(IMPS), Real Time Gross Settlement (RTGS), National Electronic Fund Transfer
(NEFT),Aadhar Enabled Payment System (AEPS) and Mobile banking. With recent
advances technologies, digital payments is having an impact on our daily lives and
beginning to offer interesting and advantageous new services. According to RBI Bulletin
cashless transaction in India increasing day by day. The statistics in report shows that in
Nov.2016 and Dec. 2016 the total value transaction done using E-Wallet was 50.74
Billion and 97.70 Billion respectively and in Jan. 2017 it is increased up to 108.69 Billion.
According to the survey conducted by Cash-Karo India, E-Wallet payment method is
more preferred by customers than other payment methods. The users of Smart phone has
been increased randomly, this has also paved the way for digital transactions. In 2015-
2016, a total of Rs. 4018 billion transacted through mobile banking as compared to Rs.
60 Billion in 2012- 2013.

2.1 Statement Of The Problem

The Union Cabinet chaired by Prime Minister Narendra Modi has approved 'Pradhan
Mantri Gramin Digital Saksharta Abhiyan'(PMGDISHA) to make 6 crore rural
households digitally literate. The outlay for this project is Rs 2,351.38 crore to usher in
digital literacy in rural India by March 2019. PMGDISHA is expected to be one of the
largest digital literacy programmes in the world. Under the scheme, 25 lakh candidates
will be trained in the fiscal year 2016-17, 275 lakh in fiscal year 2017-18 and 300 lakh in
fiscal year 2018-19. The Committee on Digital Payments constituted by the Ministry of
Finance, Department of Economic Affairs has recommended for the medium term
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 strategy for accelerating growth of Digital Payments. However, many of the digital
payment methods are not popular among the common people and people are not
comfortable to use them for their day-today’s transactions. There is less awareness among
the people about different types of digital payment methods. There is also a myth among
them that overspending is possible when we use the digital payment nodes and banks
deduct high transaction cost for the digital payment operations. Hence literacy about the
digital payments has become a necessity.

OBJECTIVES OF THE STUDY

The general objective of the study is to know about the various types of digital payment
transactions. The following are the specific objectives,
❖ To explore the various modes of digital payment transactions that is offered by
various financial institutions.
❖ To gauge the extent of operations of digital payments while dealing with online
transactions and
❖ To offer suitable suggestions in handing digital payments as easy and convenient
one.

METHODOLOGY
Many studies on consumer acceptance some of electronic banking services were
conducted in various countries, for example in Australia (Sathye, 1999), Turkey
(Polatoglu and Ekin, 2001), United Kingdom (Howcroft et al., 2002), Hong Kong (Cheng
et al., 2006) or Pakistan (Qureshi, 2008). Those studies were dedicated mainly to
investigation of internet banking using Technology Acceptance Model. As long as
contactless payments are technology belonging to electronic banking, our study will use
TAM for investigation of consumer acceptance of contactless payments. According to
results of literature review, following model of consumer acceptation of contactless
payments was developed. The model includes original technology acceptance model with
some changes made by Pikkarainen et al.(2004).

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 FIGURE 1 - The research model of contactless payments use.
Technology acceptance model developed by Davis (1989) was often extended and modified.
The model of Pikkarainen et al. (2004) was extended with factors of perceived security and
the amount of information about technology investigated and quality of Internet connection
(specifically for online banking usage). Our model does not include the quality of Internet
connection, while it is not necessary for consumer to use Internet while paying contactless
every time. Contactless payments using cards do not use Internet connection on the client’s
side at all and in the case of smart device payments, it depends on technical solution of NFC
payments system. Moreover contactless payments use only small amount of data easily
transferable in 3G mobile networks. It is expected that internet connection would not have
significant impact on acceptance in this case. Results of Pikkarainen et al. (2004) and Qureshi
et al. (2008) confirmed that the quality of internet connection did not influence the acceptance
of technology. So according to our model, following research hypotheses were formulated.
H1. Perceived usefulness has a positive effect on consumer acceptance of contactless
payments.
H2. Perceived ease of use has a positive effect on consumer acceptance of contactless
payments.
H3. Perceived enjoyment has a positive effect on consumer acceptance of contactless
payments.
H4. Perceived security has a positive effect on consumer acceptance of contactless payments.
H5. The amount of information about contactless payments has a positive effect on consumer
acceptance of contactless payments.

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 TECHNOLOGY

FIGURE 2 - Level of privacy and information security on various application.

Fig. 1 depicts the various applications of contactless smart cards and RFID, along
with their level of information security FID and smart cards both can be used in transit
payment applications and most of the time they are used together to provide increased
convenience to end users. An example of this would be the "Touch n Go" cards used on toll
ways. The “Touch n Go” card is a contactless smart card, but this card can be purchased with
an additional RFID transponder (where the smart card will be inserted) so that the toll booth
reader can read the cards from a greater distance than the 10 cm limit restricted by smart card
standards. Without the additional RFID transponder, the contactless smart cards can still be
used, which means that the driver need to screen down their windshield to tap the card on the
reader, instead of just driving through while the RFID transponder will be detected by the
reader above the toll booths at a greater distance [1].
RFID is a wireless automatic identification and data capture (AIDC) technology.
It includes tags, Antenna or coil Electronics programmed with unique information, reader and
software. The Integrated circuits group comprises of IC designers, antenna and IC
manufacturers. These ICs are used in the development of RFID hardware equipments which

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comprises of tags (that can be active or passive), in addition to readers and printers. The
software and middleware in the equipment is integrated with the back-end systems by the
system integrators who also act as the distributors and value added resellers. In addition,
several companies provide training and consulting services. Some companies focus on one
key aspect while others provide services across the value chain. The Table I lists the various
RF technology features.
5.1 RF Technology Features:

ISO 15693 is making an important impact in the contactless market with its tracking function
capability within a contactless application and its convenience through increased proximity
distance and hands-free operation. It expands the communication range for vicinity operations
to around 1.5 m. In proximity operations, ISO 15693 doubles the communication distance of
ISO 14443 [1].

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 ISO 18000 was developed, originally, for electronic identification
applications. There are now many variations within the ISO 8000 standard, from 125 KHz to
several GHz, including ISO 15693 for 13.56 MHz.
5.2 Contactless Smart Cards:
Contactless Smart Cards are cards that contain an IC (integrated chip) that
complies with ISO 14443 (mostly type A) or better known as MiFare. ISO 14443 sets
communication standards and transmission protocols between card and reader to create
interoperability for contactless smart card products. Read/write range of devices is usually up
to 10 cm. (Note: this is generally accepted but it is not stated in the standard). End users these
days often require full compatibility in both the readers and in the cards. Cards are intended
to communicate with the reader antenna at a frequency of 13.56 MHz. The main
communication protocols are supported under the ISO 14443 standard series - Type A
(MiFare), Type B and Type C (Sony - FeliCa IC - mostly in Japan). ISO 14443A is the most
widely used contactless smart card standard in the world, mainly for transport applications.
Contactless smart cards have been particularly popular in recent years
because of its security and multi-application aspect. This means that one card can be utilized
across transit, payment and access (combined into one card). Transit (sometimes combined
with payment) is currently the most popular application using contactless smart cards. The
key applications aside from transit and door access are currently the growth areas such as
government ID, payment/banking, logical access control and e-passport (which are
technically not a card, but use the same contactless IC chip). Contactless smart cards are
generally used for applications like these, where a higher level of security and privacy is
necessary to protect the information stored by the card.
Contactless payment can be done at any retailer that displays the symbol as shown
in Fig. 3.

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 FIGURE 3 - International symbol for contactless payments.
It's expected that the contactless payment will save time at the checkout. Known as ‘wave and
pay’ or ‘tap and go’ cashless and contactless cards are a method of paying for everyday items,
such as coffee or newspapers, simply by swiping a credit or debit card across a reader.
Contactless payments are expected to revolutionize the way low-value purchases are made.
This particular method of payment is designed to save time for customers, reduce the risks of
handling cash and mean less time dealing with purchases for retailers. It is expected to be
used most often in transactions where speed is essential, such as at cinemas, fast-food outlets,
petrol stations, supermarkets and theatres.

TYPES OF DIGITAL PAYMENTS6

6.1.PAYMENT CARDS :
The most common types of payment cards are credit cards and debit cards. Payment
cards are usually embossed plastic cards, 85.60 × 53.98 mm in size, which comply
with the ISO/IEC 7810 ID-1 standard. They usually also have an embossed card
number conforming with the ISO/IEC 7812 numbering standard. Most commonly, a
payment card is electronically linked to an account or accounts belonging to the
cardholder. These accounts may be deposit accounts or loan or credit accounts, and
the card is a means of authenticating the cardholder. The information required for
using payment cards are Card Verification Value (CVV Number) and Expiry date of
the payment card. CVV number is a combination of features used in credit and debit
cards for the purpose of establishing owner’s identity and minimizing the risk of fraud.
Payment cards require 2 factor authentications. Authentication is a process in which
credentials provided are compared to those on file in a data base of authorized users
information on a local operating system. Factors of authentication includes
Knowledge factor (PIN), Possession factor (ID card, Smart phone) and Inherence
factor (Fingerprint, face or voice). Generally the Payment cards can be distinguished
on the basis of its features. They are Credit card: The first universal credit card,
which could be used at a variety of establishments, was introduced by the Diners'
Club, Inc., in 1950. Another major card of this type, known as a travel and
entertainment card, was established by the American Express Company in
1958.Central Bank of India was the first public bank to introduce Credit card. The
issuer of a credit card creates a line of credit (usually called a credit limit) for the
cardholder on which the cardholder can borrow. The cardholder can choose either to
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 repay the full outstanding balance by the payment due date or to repay a smaller
amount, not less than the "minimum amount", by that date.

❖ Debit card: Debit card was introduced by Citi Bank. With a debit card, when
a cardholder makes a purchase, funds are withdrawn directly from the
cardholder's bank account.

❖ Smartcard: Banks are adding chips to their current magnetic stripe cards to
enhance security and offer new service, called Smart Cards. Smart Cards allow
thousands of times of information storable on magnetic stripe cards. In addition,
these cards are highly secure, more reliable and perform multiple functions. They
hold a large amount of personal information, from medical and health history
to personal banking and personal preferences.
❖ Charge card: With charge cards, the cardholder is required to pay the full
balance shown on the statement, which is usually issued monthly, by the payment
due date. It is a form of short-term loan to cover the cardholder's purchases.
❖ Fleet card: A fleet card is used as a payment card, most commonly for gasoline,
diesel and other fuels at gas stations.
❖ Gift card: A gift card also known as gift voucher or gift token is a prepaid
stored-value money card usually issued by a retailer or bank to be used as an
alternative to cash for purchases within a particular store or related businesses.
❖ Store card: It is a credit card that is given out by a store and that can be used
to buy goods at that store.
6.2.UNSTRUCTURED SUPPLEMENTARY SERVICE DATA (USSD):
USSD is sometimes referred to as "Quick Codes" or "Feature codes", is a protocol used
by GSM cellular telephones to communicate with the service provider's computers. A
typical USSD message starts with an asterisk (*) followed by digits that comprise
commands or data. Groups of digits may be separated by additional asterisks. The
message is terminated with a number sign (#).The innovative payment service *99# works
on Unstructured Supplementary Service Data (USSD) channel. This service allows
mobile banking transactions using basic feature mobile phone, there is no need to have
mobile internet data facility for using USSD based mobile banking. USSD is generally
associated with real-time or instant messaging services. USSD is sometimes used in
conjunction with SMS. The user sends a request to the network via USSD, and the
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 network replies with an acknowledgement of receipt :"Thank you, your message is being
processed. A message will be sent to your phone." The Information required for USSD
transaction is MPIN/ IFSC/Aadhar number/Account number. Mobile Banking Personal
Identification Number (MPIN) works as a password when we perform any transaction
using Mobile.
6.3. AADHAAR ENABLED PAYMENT SERVICE (AEPS):
The AEPS system leverages Aadhaar online authentication and enables Aadhaar
Enabled Bank Accounts (AEBA) to be operated in anytime-anywhere banking mode
through Micro ATMs. This system is controlled by the National Payments
Corporation of India (NPCI). Aadhaar Enabled Payment System is a way to get money
from the bank account. This system of getting money neither requires your signature
nor Debit card. It is also not needed to visit a bank branch for getting money through
the Aadhaar Enabled Payment System.For AEPS transaction following information is
needed.
1. Aadhaar Number
2. Bank Issuer Identification Number (IIN) or Name
3. Finger Print
6.4. UNIFIED PAYMENTS INTERFACE (UPI): Unified Payment Interface
(UPI) is a new payment interface introduced by National Payments Corporation of India
(NPCI) under the supervision of Government of India to promote a cashless-society and
mobile banking. Unified Payments Interface (UPI) is a system that powers multiple bank
accounts to use several banking services like fund transfer, and merchant payments in a
single mobile application. Sending and receiving money through UPI payment app is like
sending and receiving a text message on your Smartphone. A user need not have multiple
banking app installed in his/her Smartphone. A user can simply add all the bank accounts
in a single UPI payment app without the hassle of remembering or even typing banking
user ID/Passwords. Each Bank provides its own UPI App for Android, Windows and iOS
mobile platform(s). The information required for UPI based transaction are Virtual
Payment Address (VPA) of recipient and Mobile banking Personal Identification Number
(MPIN). By sharing VPA, funds can be transferred and money can be collected.
6.5.DIGITAL WALLETS: A Digital wallet is a way to carry cash in digital format.
Credit card or debit card information should be linked to digital wallet application or
money can be transferred in online to mobile wallet. Instead of using physical plastic card
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 to make purchases, it can be paid through smartphone, tablet, or smart watch. The
Services offered by Digital Wallets are Balance Enquiry, Passbook/ Transaction history,
Add money, Accept Money, Pay money etc. Digital wallets are composed of both digital
wallet devices and digital wallet systems. A mobile wallet is simply the digital wallet on
the mobile handset. Presently there are further explorations for smart phones with digital
wallet capabilities, such as the Samsung Galaxy series and the Google Nexussmart
phones utilizing Google's Android operating system and the Apple Inc.iPhone 6 and
iPhone 6 Plus. Most banks have their e-wallets and some private companies. e.g. Paytm,
Freecharge, Mobikwik, Oxigen, mRuppee, Airtel Money, Jio Money, SBI Buddy, itz
Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, SpeedPay etc.
6.6. POINT OF SALE MACHINES: Point of Sale Machine made it faster and
easier for cashiers to ring up sales and keep tabs on transactions. In the 1970s, innovation
helped traditional cash registers evolve into computerized point of sale systems. It was
also during these years that devices such as credit card terminals and touch screen
displays were introduced. The point of sale (POS) or point of purchase (POP) is the time
and place where a retail transaction is completed. It is the point at which a customer
makes a payment to the merchant in exchange for goods or after provision of a service.
After receiving payment, the merchant may issue a receipt for the transaction, which is
usually printed but is increasingly being dispensed with or sent electronically. A retail
point of sale system typically includes a cash register (which in recent times comprises a
computer, monitor, cash drawer, receipt printer, customer display and a barcode scanner)
and the majority of retail POS systems also include a debit/credit card reader.
6.7. MOBILE BANKING: Mobile banking is a service provided by a bank or other
financial institution that allows its customers to conduct different types of financial
transactions remotely using a mobile device such as a mobile phone or tablet. It uses
software, usually called an app, provided by the banks or financial institution for the
purpose. Each Bank provides its own mobile banking App for Android, Windows and
iOS mobile platform(s).The earliest mobile banking services used SMS, a service known
as SMS banking. With the introduction of smart phones with Wireless Application
Protocol (WAP) support enabling the use of the mobile web in 1999, the first European
banks started to offer mobile banking on this platform to their customers. Mobile banking
is known as M-banking or SMS Banking. The european company called PayBox
supported financially by Deutsche Bank, in 1999 started mobile banking. The cost of

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 mobile devices has been reduced drastically and is still being reduced. Network speed is
much better than before and data plans are not as costly. All of these changes have
provided necessary raw materials for the growth of mobile banking and the numbers of
people using mobile banking is increasing day by day. Users, who were using
computers/laptops for online banking, are moving towards mobile banking because of
ease of use and fast access. Transactions through mobile banking may include obtaining
account balances and lists of latest transactions, electronic bill payments, and funds
transfers between a customer's or other’s accounts. e.g. –iMobile for ICICI bank, Kotak
Bank App for Kotak Mahindra bank, SBI freedom app for State bank of India
6.8. INTERNET BANKING: Internet banking, also known as online banking, e-
banking or virtual banking, is an electronic payment system that enables customers of a
bank or other financial institution to conduct a range of financial transactions through the
financial institution's website. Online banking was first introduced in the early 1980s in
New York, United States. Four major banks — Citibank, Chase Bank, Chemical Bank
and Manufacturers Hanover — offered home banking services. Chemical introduced its
Pronto services for individuals and small businesses in 1983, which enabled individual
and smallbusiness clients to maintain electronic checkbook registers, see account
balances, and transfer funds between checking and savings accounts. ICICI Bank was the
first Indian bank to provide internet banking facility. Information required for Internet
banking are Account number and Indian Financial System Code(IFSC code). Indian
Financial System Code is a 11 digit alpha numeric code that uniquely identifies a bank
branch participating in any RBI regulated fund transfer system. Beneficiary registration
is required for the transactions. Beneficiary is a person who receives benefit from a
particular entity or a person. To register a beneficiary information such as beneficiary
name , account number, bank address and fund transfer limit is to be given. Following
are the services provided by Internet banking.
❖ Bill payment service -Internet banking facilitates payment of electricity and
telephone bills, mobile phone, credit card and insurance premium bills as each
bank has tie-ups with various utility companies, service providers and insurance
companies, across the country.
❖ Railway pass - Railways has tied up with ICICI bank and so the railway pass
for local trains is available in online.

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 ❖ Recharging the prepaid phone- By just selecting the mobile number and
the amount for recharge, phone recharge can be done within few minutes.
❖ Shopping - With a range of all kind of products, online shopping and the
payment is also made conveniently through the account.

FUND TRANSFER
a. National Electronic Fund Transfer (NEFT)- National Electronic Funds Transfer
(NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under
this Scheme, individuals, firms and corporates can electronically transfer funds from
any bank branch to any individual, firm or corporate having an account with any other
bank branch in the country participating in the Scheme.
b. Real Time Gross Settlement (RTGS)- RTGS is defined as the continuous (real-
time) settlement of funds transfers individually on an order by order basis (without
netting). 'Real Time' means the processing of instructions at the time they are received
rather than at some later time; 'Gross Settlement' means the settlement of funds
transfer instructions occurs individually (on an instruction by instruction basis)
c. Immediate Payment Service (IMPS)- IMPS offers an instant, 24X7, interbank
electronic fund transfer service through mobile phones. IMPS is an emphatic tool to
transfer money instantly within banks across India through mobile, internet and ATM
which is not only safe but also economical both in financial and non-financial
perspectives.
d. Electronic Clearing System (ECS)- ECS is an alternative method for effecting
payment transactions in respect of the utility-bill-payments such as telephone bills,
electricity bills, insurance premia, card payments and loan repayments, etc., which
would obviate the need for issuing and handling paper instruments and thereby
facilitate improved customer service by banks / companies / corporations /
government departments, etc., collecting / receiving the payments.

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 7.1 View On Digital Operations:

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 GLOBAL ADOPTION
Global Adoption We have discerned that once the infrastructure is in place to facilitate
usage of contactless payments, consumers do so robustly.
Looking at data points from other developed countries
which have rolled out contactless payments, we observe
strong growth of contactless payments in those economies
and an increase in digital payments.
We note two takeaways:
1) It typically takes two to three years for contactless adoption to reach its inflection
point, and
2) Contactless serves as a powerful catalyst in accelerating cash-to-card conversion.
Countries where contactless was introduced earlier than the U.S.
have seen strong adoption—Australia (~90%), Canada (~50%+), UK (>50%), Spain
(~50%), Russia (>50%), Czech Republic (>90%), Hong Kong (~40%+), and Singapore
(>65%). This indicates a global openness to nascent payment methods in which the
checkout experience is more frictionless. Furthermore, contactless converts more small
value payments from cash-to-card and drives engagement. According to Visa, close to
60% of global face-to-face transactions are tap to pay, excluding the U.S. And what’s
really exciting about tap to pay is that it offers clear proof of engagement growth from
consumers, with an average lift of 20% in payment volume card spend for people who
start using tap to pay.5 Turning to the U.S., contactless adoption and usage have lagged
other markets. While as of 2018 the preferred payment method in the U.S. was heavily
skewed towards card payments (62%) versus cash and check (38%), contactless
payments comprised less than 1% of card payments.8 With the merchant infrastructure
now in place and major card issuers rapidly scaling contactless card deployment to

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 consumers over the past 12 to 18 months, the U.S. market looks poised for strong
growth in contactless particularly given the trial run many consumers are getting due to
the COVID-19 pandemic. A recent Mastercard Contactless Consumer Polling Survey
found that 50% of U.S. consumers worry about the cleanliness of signature touchpads
used at POS terminals, likely fueling the 51% of Americans who are ow using some
form of contactless payments. Of the new adopters, 88% said the process of paying
with contactless is relatively easy.

ECOSYSTEM OUTLOOK:

The NFC connection between two devices uses radio waves similar to radio-frequency
identification (RFID) labels used in stores, warehouses, and other wireless tracking
applications. When making an in-store purchase using tap to pay, your payment card or
smartphone acts as the active device, transmitting data to the passive device—the payment
reader. Your payment credentials are encrypted using tokenization, which protects sensitive
card information by replacing actual data with a randomly generated reference number. NFC
has key advantages over other wireless technologies, like Bluetooth and WiFi, that tailor its
application to payments technology. Its superiority in pairing connectivity and lower-power
consumption (ideal for passive devices) far outweigh its drawbacks in lower data transmission
speed and range. Further, NFC can induce electric currents within passive devices, allowing
active devices to power on the passive device when it comes into range. Bluetooth connections,
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on the other hand, can transmit data at further ranges (up to 10 meters, or 33 feet) and transmit
data at higher speeds, but have a significant drawback due to manual pairing requirements
which creates a huge inconvenience in what should be a seamless payment experience.

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 INFRASTRUCTURE

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 SECURITY CAPABILITIES
Despite the ease of payments, card issuers have insisted that the security
risks are fairly low. They assure that a retailer will not be able to accidentally take
consumer payment twice from same account as the reader can only perform a single
transaction at a time. They also claim that purchases cannot be made without consumer
knowledge (for example, if consumer walk past the card reader it will not automatically
activate) as the card must be within 10 centimetres of the reader and the retailer must
have first entered the amount to approve.
Significantly, there are no limits to the number of contactless transactions
that consumer can make in a day (payments will be limited only by consumer maximum
withdrawal limit). This has its advantages, but it also means that if the card falls into the
wrong hands, it would be very easy for someone to make a lot of transactions very easily
as they don’t need to know owner PIN. Most credit cards are protected by a 100% fraud
protection guarantee which should cover for any loss, theft and misuse.
❖ Mutual authentication. For applications requiring secure card access, the
contactless smart card-based device can verify that the reader is authentic and
can prove its own authenticity to the reader before starting a secure transaction.
❖ Strong information security. For applications requiring complete data protection,
information stored on cards or documents using contactless smart card
technology can be encrypted and communication between the contactless smart
card-based device and the reader can be encrypted to prevent eavesdropping.
Hashes and/or digital signatures can be used to ensure data integrity and to
authenticate the card and the credentials it contains. Cryptographically strong
random number generators can be used to enable dynamic cryptographic keys,
preventing replay attacks.
❖ Strong contactless device security. Like contact smart cards, contactless smart
card technology is extremely difficult to duplicate or forge and has built-in
tamper-resistance. Smart card chips include a variety of hardware and software
capabilities that detect and react to tampering attempts and help counter possible
attacks. For example, the chips are manufactured with features such as extra
metal layers, sensors to detect thermal and UV light attacks, and additional
software and hardware circuitry to thwart differential power analysis

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 ❖ Authenticated and authorized information access. The contactless smart card’s
ability to process information and react to its environment allows it to uniquely
provide authenticated information access and protect the privacy of personal
information. The contactless smart card can verify the authority of the
information requestor and then allow access only to the information required.
Access to stored information can also be further protected by a personal
identification number (PIN) or biometric to protect privacy and counter
unauthorized access.
❖ Protection against transaction replay. For applications where it is critical that
contactless transaction data not be able to be replayed in a fraudulent transaction,
contactless smart cards can generate dynamic data every time they are read.
Dynamic data generation per read provides logical security and inhibits
fraudulent replay of contactless card data that may have been previously read.
For example, contactless credit, debit and prepaid payment card data includes a
dynamic card verification number (CVC or CVV) or transaction certificate (for
an EMV card) that is unique for every transaction. This dynamic data is
generated by the contactless card based on a secret key that was stored in its
secured memory by the card issuer. This key, along with a random number,
transaction counter and a specific algorithm, is used to generate dynamic data
every time a contactless payment card is read for a transaction. The same
capability exists regardless of the form factor for the contactless smart chip (e.g.,
card, fob, mobile phone)
❖ Support for biometric authentication. For human identification systems that
require the highest degree of security and privacy, smart cards can be
implemented in combination with biometric technology. Biometrics is
measurable physical characteristics or personal behavioural traits that can be
used to recognize the identity or verify the claimed identity of an individual.
Smart cards and biometrics are a natural fit to provide two- or multi-factor
authentication. A smart card is the logical secure storage medium for biometric
information. During the enrolment process, the biometric template can be stored
on the smart card chip for later verification. Only the authorized user with a
biometric matching the stored enrolment template receives access and
privileges.

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 ❖ Strong support for information privacy. The use of smart card technology
strengthens the ability of a system to protect individual privacy. Unlike other
technologies, smart card-based devices can implement a personal firewall for an
individual, releasing only the information required and only when it is required.
The ability to support authenticated and authorized information access and the
strong contactless device and data security make contactless smart cards
excellent guardians of personal information and individual privacy.

THE BUSINESS BENEFITS OF CONTACTLESS SMART

CHIP TECHNOLOGY
Governments, corporations, financial service providers, and transit agencies are selecting
contactless smart chip technology to implement new, secure identification and payment
applications.
RF-enabled technology can deliver a number of benefits to an identity verification
application. For example:
❖ Speed and convenience. RF-enabled technology can improve the speed
and convenience of the identity verification process. A user can simply
hold an RF-enabled identity credential in close proximity to a reader and
have the required identity information quickly communicated to the
identity verification system. This can improve throughput vs. processes
that require the user to insert or swipe an identity credential.
❖ Durability and reliability. RF-enabled technology is well suited to
identity verification systems that are exposed to the elements and have
high usage. RF-enabled smart cards are durable and reliable. RF-enabled
smart cards and sealed RF readers prevent damage when identity
credentials and readers are exposed to dirt, water, cold, and other harsh
environmental conditions.
❖ Security. RF-enabled smart card technology can improve the security of
the identity verification process and credential–providing secure storage
and communication of identity information and making it much more
difficult for identity credentials to be forged or modified.

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 ❖ Privacy. RF-enabled smart card technology implements and enforces
the issuer’s privacy policies to protect an individual’s privacy.
❖ Contactless financial payment devices. Consumers tap their contactless
payment devices on (or wave them at) specially equipped merchant
terminals, transmitting payment information wirelessly from the
consumer to the merchant. The benefits of contactless payment for the
consumer and the merchant have been proven in numerous
implementations. Increased convenience for the consumer results in
increased sales and faster transaction times for the merchant.
Merchants also enjoy lower costs, due to fewer requirements to handle
cash, improved operational efficiencies, and lower maintenance costs,
resulting from improved reliability of contactless readers. By issuing
secure, contactless smart chip-based payment devices, financial service
providers are providing consumers with a more convenient payment
mechanism and increasing transaction volumes by replacing cash.
❖ Corporate and government employee identification. Both government
agencies and corporate enterprises are increasingly implementing
smart card-based employee identification badges. These ID badges
typically include both a contactless smart chip for secure physical
access to buildings and facilities and a contact smart chip for secure
logical access to networks and computers.
❖ Transit payment. Today, virtually all new transit fare payment systems
either in delivery or procurement use contactless smart chip-based
cards as the primary ticket medium. Contactless fare payment cards
offer increased customer convenience, which helps to generate
ridership growth and improve the transit operator’s bottom line. Such
cards provide an efficient and convenient substitute for cash,
increasing security, reducing fraud, and reducing handling costs for
transit operators. Contactless fare payment implementations also lower
operating costs, due to increased reader reliability and longer card
lives.

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 ADVANTAGES
❖ The card is faster to use. To make a purchase, the card owner just waves his
card over the RFID reader, waits for the acceptance indicator - and goes on his
way. American Express, Visa and MasterCard have all agreed to waive the
signature requirement for contactless credit card transactions under $25.
Contactless smart card transaction takes 15 seconds, magnetic strip card
transaction 25 seconds, cash transaction 34 seconds.
❖ The contactless cards use highly secure data transmission standards. Contactless
cards make use of the most secure encryption standards practical with current
technology. 128-bit and triple DES encryption makes it nearly impossible for
thieves to steal any data.
❖ The contactless card never transmits a card number. Instead, the RFID chip
within the card creates a unique number for the transaction; if a criminal
intercepted the number, it would be useless even if successfully decrypted.

AWARENESS/SUGGESTIONS
❖ Government can ensure to the public that the operation of digital payment
transaction is free from transactions cost which in turn helps the customers of
various transaction to purchase via on line mode.
❖ Government could give concession to the retailers, merchants and other
suppliers who sell the products and services via digital mode and this in turn
will encourage all the merchants to become e-merchants.
❖ Training Programmes could be organised by the government to train all the
people to make use of the digital payments.
❖ Government can give continuous media coverage through TV news/ shows,
Radio or social networking or newspapers/magazines about the benefits of
digital payments to the society and for the individual.
❖ Customers must be able to comply with the terms and conditions of Digital
payment methods, notify the issuer of the loss/theft of the Electronic Payment

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 Instrument (EPI) immediately and keep track on the balance, especially after
each transactions.

CONCLUSION
In future the digital payments are going to be a must and so the change
in the habits of the people to accept the digital payment is also must. The cashless
transition is not only safer than the cash transaction but is less time consuming. It also
helps in record of the all the transaction done. India has more than 100 crore active
mobile connections and more than 22 crore smart phone users as of March 2016. This
number is going to increase further with a faster internet speed. The reach of mobile
network, Internet and electricity is also expanding Digital payments to remote areas. So,
it is without doubt said that future transaction system is cashless transaction.

REFERENCES
1. E. Gordon and K. Natarajan “Banking Theory, Law and Practices” Himalaya
Publishing House, 22nd Revised Edition , 2010, Pp 499- 504.
2. Aravind Kumar, “Demonetisation and cash less banking transactions in India ”
International Journal of new innovations in Engineering and TechnologISSN: 2321-
6319, Vol. No. 7, Issue No. 3, April 2017, Pp30-36.
3. https://timesofindia.indiatimes.com/.../cabinet-approves...2351-cr-digital-literacy-
progra.
4. https://en.wikipedia.org/wiki/Digital_wallet
5. MasterCard Worldwide, Multinational financial corporation,
http://www.mastercard.com, 2009

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