SBI wants to let you pay your bills with keychains

While payments have moved much ahead of just plastic cards, mobile phones and watches, SBI wants to push the bar for digital transactions through wearable devices.

The state-owned bank has sought bids to support its foray into wearable payment technologies and for personalizing and upgrading debit cards, according to a document seen byMint. Apart from using the keychain, the bank also wants to try out NFC (near-field communication) stickers and silicon bands, among others. The bank, the document showed, wants proposals from interested bidders to offer solutions that will work seamlessly with its existing infrastructure.

“What we use today as contactless transactions, many shopkeepers even call it a Wi-Fi card, is essentially NFC. You tap it on the machine and the transaction goes through,” said Parijat Garg, an independent fintech consultant. “That is the underlying technology SBI wants in all debit cards issued over the next three years.”

While far more prevalent in advanced economies, payments via wearable devices, including Apple Pay with the Apple Watch, have seen far less innovation and adoption in India. SBI is exploring this capability as debit cards see a significant decline in usage amid wider adoption of UPI (Unified Payments Interface) and an increase in credit card usage. According to the Reserve Bank of India data, there were 19.5 billion UPI transactions, whereas credit and debit cards put together were used 343.4 million times in July alone.

“They (SBI) have also included wearables like stickers, keychains, and silicon bands in the proposal but the volumes are very small compared to cards—3 million wearables versus 230 million cards over three years,” said Garg, citing SBI’s request for proposal. “Within wearables, the bulk is NFC stickers (2.5 million), while keychains are around 600,000, and silicon bands and others are just 70,000–80,000. This clearly looks experimental.”

This would not be SBI’s maiden venture into wearable payments. Former SBI chairman Rajnish Kumar had announced a partnership with Titan Co. in 2020 for contactless payment watches. The latest push happened three months ago. In a post on social media platform X (formerly Twitter) on 22 May, SBI’s official handle posted that the keychains were available for ₹399 plus taxes.

Queries emailed to SBI remained unanswered until press time.

Industry parallels

Other lenders also have wearable payment solutions. These include smartwatch payment features, dedicated devices like smart rings, and contactless payment wearables such as Axis Bank’s ‘Wear ‘N’ Pay’, Kotak Mahindra Bank’s ‘Kotak Wearable Payments’, Bank of Baroda’s ‘bob World Wave’, and IndusInd Bank’s ‘Indus PayWear’. These use NFC technology for tap-and-pay transactions of up to ₹5,000, and are secured by tokenization.

“SBI is very forward-looking in that if they bring in a certain form factor which can increase the usage of debit cards; obviously it benefits everyone in general,” said Rahul Jain, chief financial officer, NTT Data Payment Services India.

With the proposed UPI 3.0 is also looking at NFC technologies and wearables, SBI is trying to make sure that they can replicate it in debit cards, Jain said. When someone like SBI takes certain steps, he said, the industry is bound to look at these technologies from a broader perspective and try to adopt them.

Digital payments body National Payments Corporation of India is working on the third generation of UPI, which is expected to be officially launched in October, subject to regulatory approvals, according to multiple reports. UPI 3.0 will be an IoT (internet of things)-enabled upgrade to allow digital and recurring payments or purchases through smart devices such as televisions, fridges, cars, washing machines and smart watches. The upgrade is also expected to offer increased use cases for credit on UPI, embedded payments and interoperability with international payment systems.

“India’s adoption has been a little slower compared with some of the other countries, but if these form factors start coming on debit cards, it will surely increase the use cases of and usage of debit cards,” said Jain.

The country’s largest lender had a branch network of over 22,937 branches, 63,791 ATMs and 240.7 million active debit card users as of March. SBI is also the largest debit card issuer in India with an average about 4.8 million contactless debit cards per month on VISA, MasterCard and RuPay platforms, including variants of contact cards and proprietary ATM cards. Till date, the bank has issued 275 million debit cards.

Securing transactions

SBI also wants proposals from bidders to help it streamline the process for issuing and printing personal identification numbers (PIN), pre-printed kits, embossing/indenting of EMV contact cards, and contactless cards. EMV cards use a microchip to encrypt transaction data, and are named after the developers–Europay, MasterCard, and Visa. The technology entails generating a unique, single-use code for each transaction, reducing the risk of card fraud and counterfeiting.

The document cited earlier showed that SBI has projected issuing 69.7 million contact and contactless debit cards in the first year of implementing the proposal, 75.3 million cards in the second year and 85.6 million cards in the third year. This would include fresh issuances as well as replacement cards.