Contactless cards are becoming increasingly popular in many countries around the world and indeed in 2022 some countries are closer to a cashless society than ever before.
Contactless cards allow users to pay for goods without having to use cash, find an ATM machine or swipe anything. This makes them very convenient, hence their growing popularity – but there are some potential security risks both for the user and for the retailer.
For retailers, understanding what the dangers and how to reduce them is important as not only could they cost the business money, they could also lead to reputational damage which could be devastating for an enterprise of any size. Learn about the ways that you could be at risk for contactless fraud and ways to avoid it.
Types of Cards
There are several different types of contactless cards available today. Each type has its own benefits and drawbacks. Here are some of the more common ones:
• Chip Cards – These contain a microchip embedded within them. They are considered safer than those with a magnetic stripe because they cannot be duplicated. However, they are not as widely accepted as magnetic stripe cards.
• Magnetic Stripe Cards – This traditional option is being rapidly phased out but are still used by many people. They are less secure than chip cards because they are easier to copy and duplicate and they are not contactless.
• Smart Cards – These are similar to chip cards, but they also store data such as personal identification numbers (PINs).
Know The Dangers of Contactless Cards.
One of life’s truisms is that with convenience comes risk and that is certainly the case here.
But let’s be clear, contactless payment is much more secure than the old magnetic strip cards and in general fraud is relatively rare in most countries.
It is also true to say that if fraudsters target your business, then it can be very distressing and expensive indeed so it pays to take precautions.
Typically, chip cards can be used in fraud in several ways;
The classic chargeback fraud is where a customer buys goods then institutes a dispute (known as a chargeback) from their bank.
In some cases, this is entirely legitimate, but in others, the customer is simply trying to get something for nothing.
Since the dawn of the modern payment industry fraudsters have been using technology to get at people’s money and RFID skimming is just the latest in a long line of attempts.
Chip cards use Radio Frequency Identification (RFID) to communicate with the card reader and enterprising fraudsters have developed RFID scanners to interrupt that communication and steal information.
Lost and stolen
Because customers don’t need a PIN number for contactless transactions, lost and stolen cards can be used relatively easily.
As long as the fraudster keeps their transactions below the set limit, no PIN number is needed and they can continue to spend until the card is blocked.
Distraction fraud is where the cashier is distracted by a member of an organised fraud gang and another then makes large refunds to a cloned or stolen card. The money is then moved to other accounts before it can be blocked by the issuer.
This is a difficult one to pull off, but if done well can end up in frauds worth thousands.
How to Keep Contactless Card Transactions Safe.
So how do you and your customers stay safe from
The first thing to say is that you should always use a PCI compliant service. The PCI Security Standards Council (PCI SSC) is a global organisation that develops and drives data security standards and resources for safe payments worldwide. So if your payment services provider is compliant then you know it is safe.
Secondly, use a secure method of taking payments such as a card reader app on your own phone. For example, tapeeno is a tap on phone app that is PCI certified to the latest CPoC standards (Contactless Payments on COTS (Commercial off-the-shelf)).
Making sure you have a PCI compliant card reader is vital when you are taking contactless payments in a busy environment.
Vigilance is also incredibly helpful. RFID skimming works only at very short range so training your staff to look out for people in your store who are acting suspiciously around cards and customers is paramount.
Next make sure your processor has a clear and understandable dashboard so you can spot instantly if you have been subjected to a distraction fraud or if you are experiencing high levels of chargebacks.
And of course, if you suspect fraudulent activity, report it immediately by calling the police. The sooner you act, the more likely
Summary; Avoiding Contactless Card Fraud In 2022
Running a business is challenging and the last thing you want is for someone to try to steal your hard-earned money.
So understanding the dangers of contactless cards and how to keep them safe for your customers is incredibly important.
Using a PCI compliant processor is the first step and training your staff to be vigilant and explaining what RFID skimming is will also help.
Above all, keeping yourself up to date on all the latest security information will give you a head start when it comes to beating the fraudsters.