“`html

Contactless Payments in India: The Transformation Led by Visa

Contactless payments in India are experiencing a significant transformation, from chai stalls in Ludhiana to metro journeys in Mumbai. This shift from a novelty to a widespread habit is driven by a rapidly digitising population, a rise in mobile-first consumers, and strong regulatory support aimed at financial inclusion.

Visa has played an essential role in this evolution. With years of global experience and strong local partnerships, Visa has transitioned from a traditional card network to a prominent digital enabler, quietly influencing India’s fintech landscape. Leading this effort is Rishi Chhabra, Country Manager for Visa India, who is not only innovating secure and seamless payment methods but also advocating for digital literacy in rural areas and empowering women-led micro-enterprises.

Driving Factors Behind India’s Adoption of Contactless Payments

Contactless payments are enhancing convenience and eliminating friction, which is catalysing the adoption of digital payments across India. Improved connectivity has simplified payment processes, with innovations such as contactless cards, smartphone tap-and-pay options, QR codes, and mobile wallets leading the charge.

A major factor is the changing consumer behaviour among the country’s digitally savvy, young population that values speed, convenience, and security in their transactions. According to a recent Visa report, the influx of smartphones and affordable internet access has popularised digital payments beyond metropolitan areas, reaching tier 2 and tier 3 cities.

The Visa report from 2023 indicates that 76% of consumers anticipate a growth in contactless payments across various devices and merchant segments, highlighting the rapid uptake of this payment method. As India moves toward a digital-first economy, contactless payments are set to become the primary payment method, fostering convenience, financial inclusion, and boosting economic growth.

Visa’s Commitment to Security in Payment Convenience

Trust is central to Visa’s operations, and security is the means through which this trust is established. Visa’s dedication to protecting digital payments is underscored by a whopping $12 billion investment in advanced security technologies in the past five years.

As the digital payment landscape in India expands, so do the risks of sophisticated scams. Responsible AI can lead the way in cybersecurity innovations, strengthening measures against these emerging threats. Visa introduced AI-driven fraud detection systems back in 1993 and has since leveraged this technology to enhance the security and intelligence of payment processes. Through AI-driven fraud deterrent measures, Visa saved clients approximately $40 billion from October 2022 to September 2023. The efficient dispute resolution processes also empower cardholders to initiate chargebacks promptly in cases of suspicious or fraudulent transactions, or if they happen to misplace their card or wallet.

Additionally, Visa advocates for educating people on digital literacy, financial awareness, and payment security to foster consumer confidence, a vital element for a safe payments ecosystem. Collaborating with the Reserve Bank of India’s “75 Digital Villages” initiative through the Ministry of Electronics and Information Technology’s Common Service Centre Academy, Visa has reached out to 50,000 rural residents, with a focus on women’s empowerment.

By implementing state-of-the-art cybersecurity innovations and participating in educational campaigns like the RBI-led Cybersecurity Awareness Month in October 2024, Visa is dedicated to creating a trustworthy digital payments infrastructure—enabling everyone to transact securely at any time and from anywhere.

The Future of Tap to Pay and Wearable Payments in India

Visa’s contactless cards allow users to merely tap their card against a POS terminal for purchases under Rs. 5,000, making it a preferred payment method for daily transactions. Additionally, users can save their payment credentials on reputable apps, allowing for quick payments using their smartphones.

The potential for contactless payments surpasses everyday retail; it has the capability to revolutionise various sectors like public transport and tourism. Globally, Visa has successfully conducted over 750 contactless transit projects in major cities such as London, Osaka, Rio de Janeiro, and New York, where passengers can conveniently use debit, credit, or prepaid options for hassle-free fare payments during their commutes.

Wearable devices are also altering on-the-go transaction patterns, integrating payments seamlessly into smartwatches and wristbands, facilitating secure and convenient tap payments. The technology employs tokenised card credentials, safeguarded by solutions like the Visa Token Service, ensuring that Visa’s aim of enhancing user experiences is met through fast, secure, and effortless payment solutions across India.

Innovations by Visa to Combat Fraud in Contactless Transactions

Visa prioritises payments security, especially as digital transactions surge in India. The inherent multilayered security features, including chip-and-PIN technology and encryption, ensure that contactless payments are both straightforward and safe for daily use.

Moreover, Visa employs advanced technology that merges AI with predictive machine learning to aid in real-time fraud detection and prevention, focusing on contactless transactions. These innovations helped averted an estimated $40 billion in fraudulent transactions globally from October 2022 to September 2023.

Two of Visa’s robust products, Visa Advanced Authorisation and Visa Risk Manager, provide global issuers with comprehensive fraud risk management solutions. Through real-time insights from Visa Advanced Authorisation and tailored customer risk strategies from Visa Risk Manager, Visa is able to offer superior authorisation performance to its clients, harnessing over 25 years of AI expertise to evaluate more than 500 unique attributes in milliseconds.

Continuously seeking to enhance payment security, Visa is also exploring the integration of biometric authentication for contactless payments, simplifying and securing the process even further. With an ongoing investment of $12 billion in cybersecurity over the past five years, Visa remains a leader in driving innovation to provide unmatched security for every transaction conducted through the Visa network.

Collaborating with Merchants to Expand Acceptance of Contactless Payments in India

The growth of contactless payments hinges on broad consumer acceptance facilitated via merchants. Therefore, extensive merchant adoption is essential. Globally, Visa is accepted at over 150 million merchant locations and is committed to making digital transactions easy and secure for businesses, especially small and micro-merchants.

Small enterprises play a crucial role in the economy, and Visa is determined to support their growth. By collaborating with acquiring partners, Visa strives to make payment acceptance accessible and straightforward for merchants. Efforts have been made to reduce acceptance costs and introduce affordable terminals for merchants throughout India. Furthermore, Visa is working collaboratively with payment aggregators and fintech innovators to introduce solutions such as ‘push provisioning’. This approach allows customers to tokenise their cards for various merchants through a unified portal or application, typically their banking app, streamlining secure payment processes.

“`

Advancing Digital Payments in India

Visa is dedicated to enhancing the sphere of digital transactions. Our focus lies in educating merchants about the advantages of digital payments and ensuring secure practices. By promoting collaboration, Visa aims to build a strong payments ecosystem that fosters the growth of contactless payments for businesses, regardless of size, throughout India.

Contactless Payments and Financial Inclusion

Contactless payments are vital for promoting financial inclusion across India, especially in semi-urban and rural regions. In the past, metropolitan areas like Delhi NCR, Bengaluru, and Hyderabad were at the forefront of adopting contactless payment technologies. However, recent insights from Visa Consulting and Analytics’ white paper titled ‘Bridging the Gap: Payments in India Beyond Metros’ indicate that digital payments in tier 2 and 3 cities are now surpassing those in metropolitan areas. Card spending in non-metro zones has increased by an impressive 175% since 2019, with cities such as Ludhiana and Agra witnessing the rise of an affluent demographic.

To further progress in rural India, Visa has partnered with MeitY’s CSC Academy to raise awareness about safe digital payment practices through the Visa Digital Village program. This initiative supports the Reserve Bank of India’s “75 Digital Villages” project, with Visa adopting 1,000 villages across 18 states and empowering approximately 50,000 individuals through financial literacy and training on payment security. As more women and young people emerge as entrepreneurs, it is crucial to integrate digital payments and security into their business strategies. Visa is passionate about empowering women and communities worldwide through training, financial education, entrepreneurial initiatives, and access to supportive networks for women-led small and micro businesses.

In India, Visa’s collaboration with United Way Mumbai involves a $1M investment enabling 11,000 underserved women across over 360 villages and towns through the Visa Empowering Women Entrepreneurs program. This initiative has supported these women in establishing sustainable micro-businesses, contributing to community development and fostering 170+ self-help groups for ongoing idea-sharing to enhance their businesses and thrive.

Our commitment to promoting financial inclusion drives our dedicated efforts toward digital literacy and awareness, making payment technology more accessible. Through contactless solutions such as QR codes, mobile payments, and card transactions, Visa seeks to build trust and cultivate a more inclusive digital payments ecosystem, equipping communities with the necessary tools and knowledge for safer and smoother transactions.

Visa’s Coordination with India’s Regulatory Framework

India’s regulatory environment is consumer-centric and practical, focusing on building an inclusive and accessible digital payments framework. Visa is firmly committed to aligning itself with India’s progressive regulations to facilitate the uptake of digital payments. With the regulator promoting greater cybersecurity awareness among citizens, Visa engages in initiatives like the RBI’s National Cybersecurity Awareness Month (October 2024) and Digital Payments Awareness Week (March 2025).

Following the Reserve Bank of India (RBI)’s mandate for tokenisation in 2021, Visa became the first provider of tokenisation services, having issued over 430 million tokens since then. Visa continues to innovate this technology, introducing new features such as secure in-app card payment options with our partners. Additionally, Visa is training law enforcement personnel on cybersecurity. Our collaboration with the Goa Government and Seva Tech aims to empower citizens with knowledge about digital payments and financial security. As Visa remains committed to fostering a digital payments ecosystem that benefits everyone, adherence to regulatory policies and guidelines is a priority, all while working towards the Government of India’s vision for a Viksit Bharat.

Emerging Trends in India’s Digital Payments Landscape

India’s digital payments evolution is influenced by transformative trends that focus on convenience, security, and inclusivity. Predictions suggest that digital transactions may triple by FY29, as mentioned in a PwC report. Contactless payment methods will allow consumers to transact using smartphones, smartwatches, fobs, and other devices. Future innovations in payments will need a solid foundation of trust, where artificial intelligence (AI) will play a significant role.

As deep learning algorithms evolve, real-time risk detection will become increasingly efficient. Payment authentication methods will transition from traditional PINs and passwords to biometric solutions. AI will also contribute to personalising payment experiences, making them more intuitive and user-friendly.

Real-time payments are expected to gain traction, enabling instantaneous fund transfers and settlements that enhance both speed and efficiency for consumers and businesses alike. Embracing innovations such as embedded finance and cross-border payment interventions will facilitate seamless, personalised payment experiences for users while improving capital access for businesses. It will also be essential for small enterprises to collaborate with independent software vendors that can pre-integrate payment processes to enhance operational effectiveness and scalability. As digital payments expand across various consumer and business segments, providing a personalised and secure payment experience for all stakeholders will be of utmost importance.