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Innovations and Payment Systems

Busted: 12 myths about contactless cards

Trust the experts on this ‘new way to pay’

Summary

A number of myths have built up around contactless payments, and it’s time to debunk some of the most persistent ones. Read what the experts have to say about common misconceptions related to contactless payments.

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Global adoption of contactless payments has increased with both merchants and card issuers — accelerated by the security and convenience they offer customers.

This year, a growing number of issuers in the U.S. began sending out new EMV cards that support contactless payments.

And with more cities rolling out acceptance of contactless payments on public transit, more consumers will be accustomed to “tap-and-go” in their everyday lives.

A new way to pay, however, inevitably brings with it concerns and reservations.

A number of myths have built up around contactless payments, and it’s time to debunk some of the most persistent ones. Read what the experts have to say about common misconceptions related to contactless payments.

Myth #1: I could accidentally pay another customer’s bill or make several consecutive payments

Payment terminals are designed to prevent payments being made for the same transaction twice, minimizing the risk of being charged multiple times, according to Jamie Topolski, director of payment card product strategy and output solutions at Fiserv.

And if a terminal detects multiple cards, some will request that only one card be presented, or the transaction might be voided to prevent double charging, he added.

“The fears of accidentally paying another customer’s bill are also unfounded because the card must be placed within a very short distance (approximately one to two inches) of the payment terminal to be read,” Topolski said.

See related:  Contactless cards: How they work

Myth #2: Anyone nearby can hack my credit card information if it is not protected with an RFID wallet

The truth is contactless cards are equipped with safeguards like chip encryption to protect sensitive information from malicious attacks, said Cyndie Martini, president and CEO of Member Access Processing.

Although these cards transmit radio waves, there has to be a callout for them to work properly.

And if you’re worried about not having an RFID-equipped wallet, don’t sweat it.

So far, there has not been a case reported about someone accessing your card by standing next to you and putting an RFID-equipped card reader near your wallet.

Martini also noted that personal data is readily available through public Wi-Fi, providing cyber crooks with a much easier method to steal your information than trying to get it from your contactless card.

“I like to explain it in this way: It’s almost like worrying about making your windows at home extra secure, but leaving the front door unlocked,” Martini said.

Of course, it’s essential to stay safe whenever you use public Wi-Fi.

Connect to secure networks when you can and never access your personal bank accounts or sensitive personal data on unsecured ones.

Don’t ever leave your laptop, tablet, or smartphone unattended in public and don’t use public Wi-Fi to shop online.

Last, make sure you turn off automatic connectivity when you’re using public Wi-Fi.

Myth #3: Criminals could harvest data from these cards using special apps

Only information of extremely limited value can be “stolen” from a contactless card, Topolski clarified.

That information doesn’t include the cardholder’s name or the security code printed on the back of the card, which makes it very difficult to use stolen information for online transactions.

It also doesn’t include the security code from the magnetic stripe or the keys needed to generate the codes, which change with every transaction, making it impossible to create a fake card.

Myth #4: A stolen card could be used to make an endless number of NFC payments without anyone noticing

Near field communication, or NFC, is the technology that allows two devices — such as your smartphone phone and a payments terminal — to “talk” to each other when they’re close together.

The addition of contactless capabilities to cards will not increase the risk of stolen cards being used by criminals, Topolski noted.

“Almost all cards issued in the U.S. are configured so that every transaction must be sent online to be authorized by the issuing bank or credit union,” he said.

In addition, he pointed out that issuers continue to use sophisticated fraud-detection systems that are highly effective at detecting unauthorized and criminal use of cards.

See related:  How to report and protect yourself from credit card fraud and identity theft

Myth #5: These cards can be used only for purchases of $80 or less

Several other countries have transaction amount limits for contactless purchases, but these do not apply in the U.S., according to Topolski.

Myth #6: Accepting cash is cheaper and easier for my business

Accepting cash comes with significant, hidden costs: it must be continually stored, guarded and accounted for. Cash can also be difficult to transport and is inherently insecure.

In other words, it must be managed.

Contactless cards, Topolski said, are ideal for small purchases like coffee or lunch, and when people are on the move, such as going through transit turnstiles.

“Top tier food and grocery, drugstore and quick-service restaurants are already implementing contactless payment systems, as are large transit authorities in many cities including Chicago, New York and Boston,” Topolski said.

See related:  Contactless cards: ‘Whoa, it’s the future!’

Myth #7: If a thief intercepts my information, they can create a counterfeit card to use in a store

While it is possible for thieves to retrieve information from your credit card, contactless cards’ one-time-only numbers securely identify each transaction, Martini said.

Because of this, the encryption technology would make it extremely challenging for potential fraudsters and hackers to develop a counterfeit card.

Myth #8: I’m responsible for purchases made by thieves if they steal my card information

Most cards issued in the U.S. include a zero fraud liability policy, protecting you from unauthorized purchased made by thieves, Topolski noted.

You should check with your issuer to confirm your responsibilities regarding its zero fraud liability policy, as it might include things like notifying the issuer as soon as you notice an unauthorized transaction or that your card is missing.

Myth #9: Fraudsters could bypass by a card and debit money using NFC

Topolski said money is not loaded onto the contactless card itself ( a contactless card is a credit card you use to borrow money from a bank, so there isn’t any money on it to be debited) — it doesn’t function like a digital wallet that contains money criminals can steal.

“Like every other transaction, a request is submitted to a consumer’s financial institution, evaluated using multiple risk criteria, and then approved or declined,” he said.

Myth #10: Even if a thief cannot counterfeit your card, they can make purchases online or by phone

When a transaction is made online or over the phone, there are multiple pieces of information that must be communicated, Martini said.

These will usually include the cardholder’s name, the three-digit number on the back of the card and the person’s billing address, she added.

Contactless cards contain some sensitive information, but it isn’t really useful unless it’s part of a transaction.

The contactless transaction data is encrypted and not accessible because the encrypted file requires a secret key or password to be decrypted.

“All of this means that the thief won’t be able to successfully complete a purchase,” Martini said.

Contactless cards have all the safety and security of contact-only EMV cards, along with the convenience of much faster and easier transactions for the cardholder, Topolski said.

“All contactless transactions include a dynamic code that changes every time a consumer taps to pay,” he revealed.

Myth #11: In addition to stealing your card data, thieves can also steal your identity

There is no additional personal information available on a contactless payment card that is useful to thieves attempting to steal your identity, Topolski confirmed.

See related:  10 things you should know about identity theft

Myth #12: Your contactless card will work anywhere you tap

“I love using contactless cards on the New York City subway — that’s tremendously easy and fast, and a major improvement over buying and swiping a Metrocard,” said Ted Rossman, industry analyst for Creditcards.com.

“Contactless is a no-brainer for public transit,” he added.

That said, Rossman has had his issues with contactless cards, too.

“At grocery stores, for example, I’d say about half the time it’s really quick and easy, and the other half of the time I’m awkwardly standing there with my card extended on top of the reader and nothing happening,” he said.

Rossman said in the latter case, he tends to give up and insert his card into the chip reader.

“I’m not sure if the stores don’t have the payment terminals configured properly or what — they say they accept contactless and mobile payments, but even the cashiers I’ve encountered are generally not very knowledgeable about contactless cards,” he added.

And it’s not just grocery stores where Rossman has run into trouble.

“I’m coming to see contactless as really nice for transit — and a mixed bag elsewhere,” Rossman said.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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