ICICI Bank, India’s largest private sector bank, has introduced payments via NFC on mobile phones. The new payment service will be available to all ICICI Bank card customers in the last week of March when they update the bank’s Pockets application.
For NFC payments, a smartphone with Android 4.4 or above will be required. The bank has not mentioned whether it will be available to iOS and Windows Phone users. In accordance with the RBI guidelines, customers can make payments upto Rs 2,000 per transaction with the mobile payment solution.
The NFC payment solution uses Host Card Emulation (HCE) technology which creates a virtual card for physical credit or debit cards issued by the Bank (basically tokenization). The virtual card bears a different card number, while the credit limit and expiry date remains same as the original physical card. The virtual card resides in the bank’s cloud server. Using the virtual cards, an ICICI Bank customer can initiate electronic payments from NFC enabled smartphones by just waving his/her phone near a contactless merchant terminal.
Note, debit and credit cards issued by other banks cannot be used to make an NFC payment.
Rajiv Sabharwal, executive director at ICICI Bank, explained that the NFC payments on Pockets will happen only on smartphones with built-in NFC chips and not with NFC stickers which can be attached to phones.
Sabharwal also added that the bank has currently deployed about 40,000 machines capable of accepting NFC payments. “ICICI Merchant services are putting up a number of machines. Along with that, a number of other banks are also putting them up and upgrading their machines to NFC. We expect this number to touch more than one lakh in the next few months. And after that we expect more cards to be issued out,” he said.
There will be a number of issues with ICICI Bank’s solution for NFC payments on smartphones when it comes to adoption.The penetration of smartphones with NFC continues to remain low and the bank also says that it cannot allow payments through NFC stickers. Furthermore, the payments can only happen through the Pockets app and the cards linked need to be issued by the bank. Then there’s the elephant in the room that there are simply not enough POS terminals which can handle NFC payments.
Payment players have also started to bypass NFC for proximity payments on phones and are rather preferring to use a combination of ultrasonic sound and Bluetooth for them. Examples are iKaaz’s Mowa, YES Bank’s tie up with Ultracash and Axis Bank’s Lime application.
ICICI Bank and NFC payments
– In April 2015, the bank launched a service called ‘Tap n Pay’ which enables near field communications (NFC) payments for users using NFC enabled tag or mobile phone at the merchant’s point-of-sale device.
– In Jnuary 2015, ICICI Bank launched its NFC-based credit and debit cards which allows customers to wave their cards near the merchant terminal instead of swiping them.