Contactless Payment

Topic Covered:

• What is contactless payment through DEBIT or Credit Card?
• How does it work?
• Can there be frauds?
• Does contactless payment fascilitates wifi payment?
• Wifi symbol on credit card
• How does payment process through Debit Card or Credit card work?
• How does ATM withdrawal from ATM card work?
• Cash Dispensing process.
• ATM card of one bank can withdraw money from other banks ATM. How?

What is Contactless payments through DEBIT or CREDIT Card?

Contactless payment through a debit or credit card is a method of making transactions without physically swiping or inserting the card into a point-of-sale terminal. Instead, the card is equipped with a near-field communication (NFC) chip that allows it to communicate wirelessly with a compatible terminal. To make a payment, you simply hold your card close to the terminal (usually within a few centimeters) and the transaction is processed securely.

This method is convenient and efficient, as it speeds up the checkout process and reduces the need for physical contact with surfaces. It's commonly used for small, everyday purchases like groceries, transportation fares, and more. There is usually a limit on the transaction amount for security reasons, and additional authentication (like entering a PIN) may be required for higher-value transactions.

For small transactions, contactless payments typically do not require a PIN (Personal Identification Number). Instead, they rely on the security of the technology itself and the transaction limit set by the card issuer or the payment network. This is designed to provide a quick and convenient way to make low-value purchases.

However, for higher-value transactions, the card issuer or the payment network may require additional authentication. In such cases, you may be prompted to enter your PIN or use another form of verification, depending on the specific security measures in place. Keep in mind that the exact rules and limits can vary by country and card issuer, so it's a good idea to be aware of the policies associated with your specific card.

How does it work?

Contactless payments work through a technology called Near Field Communication (NFC), which allows data to be transmitted wirelessly over short distances. Here's how it works:

1. **Card Initialization**: Your debit or credit card is equipped with an embedded NFC chip. When you enable contactless payments, this chip is activated.

2. **Merchant's NFC Terminal**: When you make a purchase at a store that supports contactless payments, the merchant's point-of-sale terminal is also equipped with an NFC reader.

3. **Card Interaction**: To make a payment, you simply hold your card close (usually within a few centimeters) to the NFC reader.

4. **Data Transmission**: The NFC chip in your card communicates with the NFC reader in the terminal. It transmits the necessary information for the transaction, which typically includes your card number and a unique transaction code.

5. **Authorization Request**: The merchant's system sends an authorization request to the card network (like Visa, Mastercard, etc.) or the bank that issued your card. This request includes details like the card number, transaction amount, and merchant information.

6. **Issuer Authorization**: The card issuer receives the authorization request and checks whether you have sufficient funds (for a debit card) or available credit (for a credit card) to cover the transaction. If so, they send an authorization code back to the merchant. If not, the transaction is declined.

7. **Transaction Completion**: If authorized, the transaction is completed. You receive a confirmation of the payment.

The entire process is quick, typically taking a few seconds. It's designed for convenience and efficiency, especially for small, everyday purchases. Keep in mind that there is usually a limit on the transaction amount for security reasons, and additional authentication (like entering a PIN) may be required for higher-value transactions.

Can there be frauds

While contactless payment technology is generally considered secure, like any form of payment, it's not entirely immune to potential fraud or misuse. There are some potential risks associated with contactless payments:

1. **Lost or Stolen Cards**: If your card is lost or stolen, someone could potentially use it for contactless transactions until you report it and it gets blocked.

2. **Unauthorized Transactions**: In rare cases, if someone gains unauthorized access to your card, they could potentially make contactless payments without your consent.

3. **Skimming**: Although contactless cards have security measures in place to prevent unauthorized reading of your card's information, there have been instances of criminals attempting to use specialized equipment to intercept data.

4. **Contactless Card Cloning**: While more challenging than traditional card cloning, it is theoretically possible for a skilled attacker to clone a contactless card.

5. **Transaction Limits**: For added security, contactless payments are typically limited to small transaction amounts. However, if a card is stolen, multiple small transactions could still add up.

It's important to note that card issuers and payment networks have implemented various security features to mitigate these risks. This may include transaction limits, encryption, and monitoring for suspicious activity. Additionally, consumers are generally protected by regulations that limit their liability for unauthorized transactions if promptly reported.

To enhance security, you can take precautions such as regularly monitoring your account statements, keeping your card secure, and promptly reporting any lost or stolen cards.

But you can typically disable the contactless feature on your debit or credit card if you prefer not to use it. This can usually be done through your bank or card issuer's online banking portal, mobile app, or by contacting their customer service.

Keep in mind that disabling the contactless feature may limit your ability to make quick, contactless payments, but it also adds an extra layer of security if you have concerns about this technology. If you ever change your mind, you can usually enable it again through the same channels.

Does contactless payments include wifi payments?

No, contactless payments and Wi-Fi payments are different technologies.

**Contactless Payments** involve using a card with an embedded near-field communication (NFC) chip to make payments by holding it near a compatible terminal. This works even without an internet connection.

**Wi-Fi Payments**, on the other hand, typically refer to using a wireless internet connection to make online payments or perform transactions through a web browser or a mobile app. This could be for things like online shopping, transferring money through a banking app, or making payments through services like PayPal.

Both methods have their own security measures in place, but they're distinct from each other. Disabling contactless payments wouldn't affect your ability to make payments over Wi-Fi.

Wifi symbol on Credit or Debit Card

The symbol we're referring to is likely the Wi-Fi symbol, which indicates that your credit or debit card is equipped with contactless payment technology. It doesn't mean that the card itself connects to Wi-Fi networks. Instead, it signifies that the card is enabled for contactless transactions using near-field communication (NFC) technology.

When you see this symbol on a card, it means you can make payments by simply tapping the card near a compatible point-of-sale terminal. This technology allows for quick and convenient transactions without the need to physically swipe or insert the card. Keep in mind that you don't need an active Wi-Fi connection for contactless payments to work; it operates on a different technology than wireless internet.

How does payment process through Debit or Credit Card work?

Debit and credit cards work through a series of steps when you make a payment:

1. **Cardholder Initiates Transaction**: You, as the cardholder, initiate a transaction by presenting your card for payment. This could be done physically at a point-of-sale terminal in a store, online during an e-commerce transaction, or through other means like an ATM withdrawal.

2. **Merchant Sends Transaction Information**: If you're making a physical purchase at a store, the merchant's point-of-sale terminal reads the information stored on the card's magnetic stripe or through its embedded chip (for EMV cards). For online transactions, you enter your card details on the merchant's website.

3. **Authorization Request**: The merchant's system sends an authorization request to the card network (like Visa, Mastercard, etc.) or the bank that issued your card. This request includes details like the card number, transaction amount, and merchant information.

4. **Issuer Authorizes or Declines**: The card issuer receives the authorization request and checks whether you have sufficient funds (for a debit card) or available credit (for a credit card) to cover the transaction. If so, they send an authorization code back to the merchant. If not, the transaction is declined.

5. **Transaction Processing**: If authorized, the transaction proceeds. For debit cards, the funds are immediately withdrawn from your account. For credit cards, the issuer essentially loans you the money for the transaction.

6. **Merchant Completes Transaction**: The merchant completes the transaction and you receive a receipt if it's a physical purchase.

7. **Settlement**: At the end of the day, the merchant's bank sends a batch of authorized transactions to the card network. The network then routes these transactions to the appropriate card issuers.

8. **Funds Transfer**: For debit cards, the funds are transferred from the cardholder's account to the merchant's bank. For credit cards, the issuer pays the merchant and creates a statement for the cardholder.

9. **Billing Cycle (for Credit Cards)**: If it's a credit card transaction, the cardholder receives a monthly statement showing all their transactions for that billing cycle.

10. **Repayment (for Credit Cards)**: The cardholder is required to repay the amount owed by the due date specified on the statement. If not paid in full, interest may be charged on the remaining balance.

It's important to note that this is a simplified overview, and there are various security measures and additional processes involved in ensuring the security of these transactions.

How does ATM card withdrawl work?

When you use an ATM (Automated Teller Machine) card to make a withdrawal, here's how the process typically works:

1. **Card Insertion**: You insert your ATM card into the card reader slot on the ATM machine.

2. **Authentication**: You are prompted to provide authentication, usually in the form of a Personal Identification Number (PIN). This is a security measure to ensure that the person using the card is the rightful owner.

3. **Card Reading**: The ATM reads the information on the magnetic stripe or chip of your card, which contains details about your account, including your bank and account number.

4. **Menu Selection**: The ATM displays a menu of options, including "Withdrawal". You select the amount you want to withdraw.

5. **Transaction Request**: The ATM sends a request to your bank's server to verify your account and the availability of funds.

6. **Authorization from Bank**: Your bank checks the validity of your card, your account balance, and your requested withdrawal amount. If everything checks out, the bank authorizes the transaction.

7. **Cash Dispensing**: If the transaction is approved, the ATM dispenses the requested amount of cash.

8. **Receipt and Card Return**: The ATM prints a receipt which usually shows the transaction details, including the amount withdrawn and your remaining balance. Your card is then returned to you.

9. **Transaction Records**: The ATM sends a record of the transaction to the bank's server for their records.

It's crucial to remember to take your card and the receipt before leaving the ATM. Always keep your PIN confidential to ensure the security of your account. Additionally, be cautious of your surroundings and cover the keypad when entering your PIN to prevent unauthorized access.

Cash Dispensing process 

When you make a withdrawal from an ATM (Automated Teller Machine), here's how the machine dispenses cash:

1. **Confirmation of Transaction**: After you've selected the amount you want to withdraw and your bank has authorized the transaction, the ATM receives confirmation to dispense cash.

2. **Cash Cassette Selection**: Inside the ATM, there are multiple cash cassettes or modules, each containing a specific denomination of bills (e.g., $20 bills, $10 bills, etc.). The ATM's software determines which cassette(s) to use based on the amount requested and the availability of bills.

3. **Bill Dispensing Mechanism**: The selected cassette moves to the dispensing mechanism. This mechanism usually contains a set of rollers, belts, and sensors.

4. **Bill Selection**: The machine determines the correct number and denomination of bills needed to fulfill your requested amount. It does this by counting the bills and using sensors to ensure they are genuine.

5. **Bill Transportation**: The machine transports the selected bills from the cassette to the dispensing area using a combination of rollers and belts.

6. **Bill Presentation**: The bills are presented to you through a slot in the ATM. This slot is designed to securely deliver the cash to you.

7. **Delivery to the User**: You retrieve the cash from the slot.

8. **Confirmation of Receipt**: The ATM's sensors verify that the bills have been successfully removed. If not, it may reattempt the delivery or prompt you to contact your bank.

9. **Completion of Transaction**: Once you have received the cash, the ATM finalizes the transaction and may offer you the option to print a receipt.

It's worth noting that ATMs are equipped with various security features to prevent tampering and ensure the safety of the cash within. These include surveillance cameras, anti-skimming technology, and measures to detect counterfeit bills.

ATM card of one bank can withdraw money from other banks ATM. How?

ATM cards issued by one bank often have the capability to withdraw money from ATMs operated by other banks due to interbank networks. Here's how it works:

1. **Interbank Networks**: Banks participate in interbank networks, such as Visa, Mastercard, Maestro, Cirrus, or PLUS, which facilitate transactions between different banks. These networks allow ATM cards from one bank to be used at ATMs operated by other banks within the same network.

2. **Card Authentication**: When you insert your ATM card into an ATM from a different bank, the ATM reads the information on the card's magnetic stripe or chip. It checks the card against the interbank network to verify its authenticity.

3. **Authorization Request**: The ATM sends a request to the cardholder's bank through the interbank network to check if there are sufficient funds and if the withdrawal limit is not exceeded.

4. **Authorization and Response**: The cardholder's bank checks the account balance and the withdrawal limit. If everything is in order, it sends an authorization code back to the ATM.

5. **Cash Dispensing**: With the authorization code, the ATM proceeds to dispense the requested amount of cash.

6. **Transaction Records**: Records of the transaction are sent to both banks through the interbank network for their records and accounting.

7. **Interbank Settlement**: At the end of the day, the transactions are settled between the banks involved. The bank that owns the ATM is reimbursed for the withdrawal amount by the cardholder's bank.

It's important to note that while most ATMs offer this service, some ATMs, particularly those in remote or less populated areas, may charge a fee for using cards from other banks. This fee is typically disclosed on the ATM screen before you proceed with the transaction. Additionally, your own bank may have policies regarding fees for using other banks' ATMs, so it's a good idea to be aware of your bank's policies.

When you use your ATM card to withdraw money from an ATM operated by a different bank, the money is indeed withdrawn directly from your account. Here's how it works:

1. **Authorization Request**: When you initiate a withdrawal, the ATM sends a request to your bank's server to verify your account and the availability of funds.

2. **Authorization from Bank**: Your bank checks the validity of your card, your account balance, and your requested withdrawal amount. If everything checks out, the bank authorizes the transaction.

3. **Cash Dispensing**: If the transaction is approved, the ATM dispenses the requested amount of cash. This cash comes directly from your account.

4. **Transaction Records**: The ATM sends a record of the transaction to your bank's server for their records.

So, in essence, the money is withdrawn directly from your account when you use an ATM, regardless of whether it's from your own bank's ATM or an ATM operated by a different bank within the same network.