Ever wondered how an EFTPOS terminal can read your debit or credit card without touching it?
The answer lies in contactless technology such as Mastercard PayPass and VISA payWave. Contactless technology allows your card to transmit information to a receiving device, without using a chip or swipe strip. It does so by using radio frequency identification (RFID).
You may be surprised to hear that this technology isn’t actually new. We have been using it for many years. If you have ever used an access card or fob key to open a door or ‘tagged on’ to public transport using a Smartrider, then you are a veteran when it comes to contactless technology.
Is it safe?
In England a prominent retail store had numerous complaints about their contactless facilities. Customers claimed that EFTPOS terminals had taken payments not from the cards they had presented for payment but from cards that had remained in their pockets. The store said that it was because the signal from the receiving device was too strong. It solved the problem by reducing the strength of the signal of the receiving device. See http://www.bbc.co.uk/news/business-22545804.
But what if the receiving device is in the hands of a criminal and not an honest retail store? For PayPass and payWave, any transaction over $100 requires a PIN number, and does not allow contactless technology. Mastercard and VISA also have intelligent systems in place that can identify possible fraud on your account’ the same systems that would apply if you had ‘swiped’ or ‘inserted’ your card. Furthermore, you could buy RFID-proof wallets that block the signal from your card, preventing it from being ‘read’ until you take it out to use it. These wallets are inexpensive and effective.
What can be done if money has been stolen?
Should you fall victim to an NFC theft you might be able to reclaim the money you lost under the ePayments Code. All lenders who have signed up to the ePayments Code must comply with its codes of practice. Fortunately, almost all banks, credit unions and building societies are now members of the ePayments Code. Under the code, if someone steals money from your account using NFC technology you can claim that money back from the bank. However the bank will not have to give it to you if you do not report the loss within a reasonable time or your actions, or inactions, somehow contributed to the loss.
If your lender has not signed up to the ePayments code the process may be more difficult.
What does the future hold?
Many smart phone producers now include NFC chips in their products. In the US, Mastercard are trialling the use of NFC chips for payments using the PayPass system. This technology is not yet available in Australia.
Whilst our ATMs and EFTPOS terminals do not yet have the technology to allow these transactions, there are many other devices out there that do. We could soon be using the NFC chips in our phones to open doors, turn on our cars and ‘tag on’ to public transport.