September 11, 2015

“Tap and Go” – Just say No!

RS2-Tap-and-Go-BlogIn a move that may slow the speed of adoption for contactless payment technologies, banks in Australia are being forced to consider implementing an “opt-in” approach for consumers when it comes to the activation of contactless payment technologies following a rise in low-value payment fraud.

Ever since contactless payment technologies began to emerge there have been concerns over security and vulnerability to low-level theft or fraud, but to date there has been nothing that threatens to set back the advance of theses fast and easy payment methods.  However, Australian banks may now be forced to create an ‘opt-in’ function that requires customers to consent to the activation of contactless payment technology following complaints by police about a rise in low-value payments fraud using stolen cards.

An Australian Parliamentary Joint Committee into financial-related crime, has criticised banks for introducing new technologies without proper consultation with law enforcement agencies, and the Committee has made the recommendation that customers are given the choice, rather than it be a standard feature on newly issued banks cards.

Evidence gathered by Victoria Police points to a ‘significant increase’ in deception offences in which new technology had enabled offenders to commit multiple low value transactions with stolen credit cards. Victorian Police now claim to be dealing with 100 extra credit deceptions per week from contactless crime.

Whilst reporting to the Committee the force also suggested that the banks provision of a Zero Liability Policy to customers who are victims of fraudulent transactions, could in some ways make the problem worse.  The force commented, “This policy is clearly advertised in conjunction with ‘Tap and Go’ technology. Widespread promotion of the Zero Liability Policy is expected to motivate offenders who are likely to see that the victim will not be at a personal loss.”

Overall the force was highly critical of the lack of consultation between financial institutions and the police when it came to the introduction of new technologies.

These claims were strongly disputed by the banks, however, Committee members sided with the police, arguing that financial service providers ought to consider law enforcement issues more carefully.

The report states that, “While banks have argued the fraud risk of new technologies is accounted for in their banking systems, the committee believes that consumers should have the option of disabling contactless payment features,” and as a consequence, ” The committee recommends that financial institutions which issue debit and credit cards create an ‘opt in’ function that requires customers to consent to contactless payment technology features being activated on their cards.”

So what will this mean for the progression of contactless payment technologies?  Will other countries take a similar stance?  Is it just a speed bump or a road block?  The choice may well soon be yours.

Source – Finextra