The COVID-19 pandemic and the physical distancing norms have changed the way we handle things. The same applies to retail payments as there are possibilities of the virus spreading through the currency notes when cash payments are made. This has led to more and more customers adopting contactless payment modes where they don’t have to pass their payments card or smartphone to the merchant.
Though such payment instruments are nothing new, the growing fondness towards them is accelerating. The concept of ‘contactless’ banking is evolving with time, considerably in metro and tier-1 cities. The pandemic widened the horizons of this payment mode beyond the urban areas and digitally literate users.
Even the non-digital type of individuals have started using the digital payment methods to make and receive payments, given the fear of the pandemic. Going forward, the trend of switching and relying on digital payments is expected to sustain and extend its reach even after the virus scare settles.
Contactless Banking is Not Just Contactless Payments
You might have misunderstood the concept of ‘Contactless Banking’ to be confined to contactless/digital payments. There is more to it! Banks have extensively adopted technology to their workflow and have come up with new ways of dealing with the customers at every point of interaction.
Whether you have heard of it or not, there are concepts, such as video banking where people can open a bank account virtually by completing a few simple steps. Internally, the bank performs an end-to-end virtual verification regarding the applicant in just a few minutes and completes the process. Further, banks are providing Virtual Relationship Managers to customers so the customers can be successfully engaged and served.
Besides, banks also offer services, such as SMS banking, mobile banking, phone banking, chatbot, missed call banking, and WhatsApp banking, to help enhance the customer experience in accessing the banking services. Banks are making use of technology to provide a customised experience to customers.
A Rise in Contactless Payments
COVID-19 forced customers to look for alternate ways of banking rather than visiting the bank branch directly. A surge was observed in the usage of the technology-led banking services over the period of 6-7 months starting March 2020. The major reason for this hike in contactless payments is that the user need not touch any public surface and can make payments through their contactless debit and credit cards or their smartphones, i.e. UPI and mobile banking apps.
Once the customers get the taste of using such services and its ease, they wouldn’t want to turn back and switch to the offline method even in the upcoming days. The pandemic can be seen as a much-required stimulus for people to choose branchless banking services.
Support from RBI
Reserve Bank of India (RBI) has been encouraging contactless payments and, in turn, contactless banking through its move of doubling the limits for contactless cards. Though the limits are subjected to the discretion of the user, RBI has extended the limits for contactless card transactions and e-mandates for recurring transactions via UPI and cards up to Rs.5,000 from the initial Rs.2,000. This extension is effective from 1 January 2021.
On the business front, contactless payments and UPI come with the benefit of a lighter infrastructure and safety. Such features make it easier for the businesses to adopt; the adoption rate, both by customers and businesses, has also been high.
Are you up for the adoption of contactless payments? How do you think of contactless banking being the new normal in the days to come? Can India become the cashless, contactless economy that it is trying to become? Let us wait and watch!
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I’m a financial and technology writer. Apart from writing, I like sketching optical illusion patterns. I love trying different cuisines. Music and nature are my all-time interests.