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November 8, 2019

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Contactless fraud

Keep on tapping: the secrets to overcoming contactless fraud

David Orme, SVP at IDEX Biometrics, discusses the security threats with using contactless cards and making contactless payments.

David Orme

Thanks to the ease of tap-and-go payments, contactless cards have transformed the payment sector since they burst onto the scene back in 2007. The payment method has officially led the race against chip and PIN since July 2018, after it was reported that more than 52% of the UK’s monthly card transactions were conducted through a contactless card. This trend shows no sign of changing anytime soon.

However, while contactless is undeniably a far more convenient method, it does possess some real issues. Research from IDEX Biometrics ASA has revealed that more than three-in-five (63%) UK consumers are worried that their contactless payment cards could be used fraudulently.

While nearly half (48%) of consumers believe contactless cards have made their in-store shopping experience more convenient, nearly three-in-five (57%) are concerned that contactless transactions expose them to theft and fraud. Worryingly, more than half of consumers (54%) also fear that criminals could scan a contactless card in their pocket, making them a victim of theft without their knowledge.

Stronger authentication

In a bid to reduce consumers fears and counter fraud in payment transactions, the European Banking Authority introduced the Second Payment Services Directive (PSD2) on 14th September.

This new law, aimed at enhancing online and payment security, requires banks and retailers to implement new Strong Customer Authentication (SCA) methods for online and in-store card payments. For consumers, this means providing at least two factors of authentication for transactions. These are factors such as a PIN or a one-time passcode, or biometric data, combined with the possession of a payment card—even for contactless payments.

The introduction of contactless payments was supposed to make shopping easy. But while the rollout of new SCA factors aims to combat fraud concerns, these additional authentication methods are frustrating for shoppers.

Our research found that two-in-five (44%) 25-34-year-olds believe that the current £30 limit for contactless payments should be removed altogether and nearly one-third (27%) of adults overall agree. PINs prove just as much of an inconvenience, as more than a third (35%) of 18-34-year-olds will make sure their transaction is under £30 so they can simply tap and pay.

Biometric solution

contactless cardHowever, with more than a quarter (26%) of those with a bank account concerned about the security of PINs to keep their money safe, not even passcodes are strong enough for consumers. Evidently, we need a better solution to prevent contactless card fraud, alleviate consumer fears and encourage worldwide adoption. Our data shows that UK consumers are ready to welcome a new form of payment card, one that combines both convenience and enhanced security.

Notably, nearly half (49%) of consumers state they would actually feel more secure if they were able to use their fingerprint and PIN to authenticate transactions via their payment card. This highlights that consumers would be much more confident about contactless payments if their bank card was protected by biometric authentication, such as a fingerprint scan, and not just card possession or a PIN as a verification method.

Consumers want more convenience than PINs provide. More than a third (35%) of UK consumers already expect fingerprint biometric authentication to be rolled out for transactions by 2020, so banks and card manufacturers need to step up now to adopt biometric technology and revolutionise payment cards for the future of payments.

Goodbye to contactless fraud

With the addition of fingerprint biometric authentication, payment cards can’t be scanned from your pocket or used without your knowledge, as the registered fingerprint must be on the card sensor to verify a transaction. This ensures a stronger level of security for contactless payments and reassurance for consumers.

Security of their data is also an important concern for UK consumers. More than two-in-five (44%) consumers state that if banks can assure them that their fingerprint biometric data would be safe, unshared and not held anywhere, they would be happy to use biometric authentication as a replacement to their PIN. Crucially, on fingerprint biometric cards, at enrolment, the fingerprint image is instantly processed into a data template. This is then stored securely directly on the card and not in a central database, meaning the customer’s details never leave the card.

Regardless of consumer fraud concerns, the UK  has seen a significant rise in the popularity of contactless payments. As a result, the strategy of introducing multiple new authentication factors may not go far enough in tackling consumers’ growing contactless fraud and theft concerns. Consumers demand fast, secure and convenient solutions in our have-it-now era.

With the ability to ensure an enhanced payment experience, fingerprint biometric payment cards can offer this solution. With the fingerprint sensor placed in a natural position on the payment card, users aren’t subjected to any additional steps when conducting a contactless transaction with existing PoS terminals. Meaning a more convenient and secure payment process for merchants and consumers alike.

Whilst contactless payments have already revolutionised the payment industry, the next stage of the innovation journey is fingerprint authentication payment cards. Through the incorporation of this cutting-edge biometric technology, users are empowered to overcome fraud from contactless payments and enjoy an enhanced shopping experience. By acting now to bring about this change,  the financial industry can help to ensure that contactless fraud, PINs and payment limits are all subjected to the history books.

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Robert Thorn

Sirs, It would appear that whilst we look to be predictably towards finger print recognition as a safer ??? means of ID, that too will no doubt be measure which can be hacked as it will be digitally scanned. Its only a question of time. Perhaps we should move to a more secure simple solution of verification. May I suggest a random generated fact which relates to our recent movements i.e. the card point asks the retailer you last did a payment with and you enter the first 3 or 4 letters of that retailers name or store or town… Read more »

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