Contactless Fraud Scare? Not So Fast.
By Andy Ramsden, Trustonic
So, contactless card fraud hit £7 million (US$5.15 million) in the U.K. in 2016, up from £153,000 (US$197,000) in 2014. Cue click-bait headlines about fraud soaring by almost 4,500 percent. When you dig a bit deeper, this is both mischievous scaremongering and quite misleading.
Salacious Spending Spree
Firstly, the article explains how contactless card theft allows criminals to “go on a spending spree without knowing a PIN or any other card details.” In reality, any spending spree is limited to between one and three contactless transactions, under £30 (in the U.K./US$38). After those initial transactions, the thief will be challenged to enter the card PIN, keeping contactless “spending sprees” to a maximum of £90 (US$116). Also, assuming you report the theft in a timely manner, your issuing bank will carry full liability for these fraudulent transactions and your money returned to you.
On face value, a 4,500 percent increase in fraud sounds serious; however, without considering the rate of growth of contactless cards over the same period, the statistic is pretty meaningless.
There were 43.3 million contactless cards in circulation in March 2014 compared with 107.4 million in March 2017, according to the UK Cards Association. That’s a 148 percent increase. Admittedly this stat is not going to grab as many headlines, but it goes some way to explain the increase in fraud.
It doesn’t of course explain away a 4,500 percent increase, but when you consider this started from a very low base, the rate of growth is less important than the absolute number. So, using the UK Cards Association data again, in 2016, £21.8 billion (US$28.1) was spent on contactless cards. This means that £7 million (US$5.15 million) in fraud amounts to just 0.03 percent of the whole, all of which is effectively underwritten by the issuing banks once the card loss is reported.
Make the Move to Mobile Contactless
And if that still makes you nervous, you could always pay using your mobile. The best mobile payment solutions use trusted execution environment technology to enable fingerprint authentication and secure smartphone screens. This means criminals can’t even make a single contactless transaction from my digital wallet if they acquire my device. This layered security makes all digital payments very secure indeed.
I’m not quite sure if the headlines stem from a lack of knowledge or hidden agendas, but a bit of rummaging into the data makes most scandalised headlines about contactless card fraud pretty much meaningless. Education on what to do if you lose your card or spot a fraudulent transaction would serve the public better than jumping on a stat to generate clicks.
Andy Ramsden is the marketing director at Trustonic, which brings hardware- and software-level security today to nearly 500 million smart devices used to access the connected world. Prior to that he was product marketing and business development manager for Proxama, a U.K.-based firm that provides end-to-end solutions for card issuers to migrate customers from magnetic stripe credit and debit cards to contactless mobile payments.
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.