Pros and Cons of Contactless Credit Cards

Ease of use

1. You can make transactions at a faster pace using contactless credit cards. You also do not have to press in your PIN number to carry out the transaction.

Disadvantages of Contactless Credit Cards

The transaction limit is low

1. The Reserve Bank of India (RBI) has stated that contactless payments come with a cap at Rs.5,000 per transaction. If you need to make payments of a higher value, then you will have to enter your PIN. A few consumers could find the cap on the transactions hinder their shopping experience.

Limited acceptance

1. In India, not all retailers accept contactless payments. Many shops are still in the process of facilitating and establishing contactless payments.

Security concerns

1. Contactless credit card payments do not require you to enter any PIN. So, there is always a fear that fraudulent transactions can easily be made with the card if it is stolen. Almost all banks will give you a 100% fraud guarantee. So, if you do lose your contactless credit card, always let the bank know, so that they can block the card.

Advantages & Disadvantages from a Business' Point of View

Advantages of Contactless Credit Cards

Better operational efficiency

1. The tap-to-pay technology is fast, easy and requires less workforce requirements. Contactless credit card payments reduce the time that a business would spend on using a credit card machine.

Enhanced customer experience

1. A lot of studies have shown that businesses that offer contactless credit card payments provide a much smoother checkout experience for the customers. This in turn, earns their loyalty.

No extra cost involved

1. A contactless payment facility does not levy any extra processing fee. The business will pay the exact fee that is applicable for a transaction with a regular credit card.

Disadvantages of Contactless Credit Cards

Security concerned customers

1. In spite of the contactless payment service being backed by a fraud detection system and also multi-layered security, a few customers are wary of making payment via a contactless payment method. This could be a deterrent to many businesses that encourage contactless payments.

So, keep in mind that like any new technology, contactless credit cards come with its pros and cons for both consumers and businesses.