Contactless Cards: Twice the Level of Fraud

The integration of EMV in the U.S. has started a low level rumble for a method that would enable speedier transactional registration at point of sale locations. Use of contactless cards for lower level transactions have been in use in the U.K. for the nearly a decade, with increased traction reported more recently in the article. U.K. banks have found ways to place certain stop-gap measures in place to balance speed with security.

They would be able to steal the card and make contactless transactions, but the system will require them to enter a PIN every so-often to verify they are the legitimate cardholder, which would eventually halt them in their tracks. Even when on their spending spree, each transaction would be limited to £30. And because you are protected against fraud, unless you had been negligent, you would have any money refunded.

Mercator recognizes while much of the resistance to contactless cards in the U.S. remains centered on their apparent less secure medium of exchange, the idea of limiting the access to available funds in a given transaction and holding non-negligent customers harmless would help to overcome the resistance to adopt of many consumers. We expect there will be wider adoption of contactless payment, especially in daily purchase environments, as individual consumers demand payment methods that fit their personal comfort levels. Further, as we move to a more technologically integrated world, the need to imbue “smart” appliances and devices with financial transaction capacities via contactless and NFC schemes in tandem with tokenization will be proven ways of doing so.

Overview by Joseph Walent, Senior Analyst, Emerging Technologies at Mercator Advisory Group

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