Nick Peplow, Director, allpay Limited
The popularity of contactless payments continues to grow and this should come as no surprise. When you have the option to pay for your morning coffee or newspaper with a quick tap of your card, your purse or wallet suddenly appears unnecessary, bulky and impractical. However, for all the benefits of contactless, we shouldn’t disregard the real possibility of fraud. It’s a battle that consumers, banks, card manufacturers, retailers and payment processing companies across Europe will wage for years to come, and needs a unified, collaborative approach to ensure the fraudsters don’t come out on top.
Recent figures from Visa Europe have shown that the rapid rise of contactless shows no sign of abating. In the last year, over 1 billion contactless transactions were made in Europe, totalling more than £8.95 billion in value. The UK leads the way in terms of the number of transactions, recording 52.6 million in March 2015, closely followed by Poland (49.7 million) and the Czech Republic (13.9 million). Certainly, the rise of contactless transactions in the UK has been attributed in part to Transport for London’s adoption of the payment method, as commuters find it easier to simply tap their card during a busy, stressful journey. In September this year the contactless limit rose from £20 to £30, increasing the temptation for consumers to tap even more.
With an increase in contactless payments also comes a greater need for security, as cards can be lost or stolen. Card scanning devices capable of reading personal details also exist which is why a collaborative approach is the best course of action. In any transaction, several different parties are involved, ranging from the bank and the company that manufactured the card, to retailers, payment management companies and the actual customer making the purchase. This means that everyone involved has the power to make an impact in fighting fraud.
Evidently, banks have a responsibility to ensure that their customer details are kept safe. The fact that card details can still be easily acquired by scammers, thanks to people becoming more and more technologically savvy, means much still remains to be done. With the internet having transformed the way we work and live, there are now different avenues for fraudsters to exploit. Combine this with new methods of measuring incidences and you have an overall increase in the occurrence of fraud. Extra-stringent checking of abnormal transaction patterns, by investment in the latest technologies, is a necessity to protect customers in the event of data theft.
However, all parties must still accept responsibility and this extends to the companies manufacturing the cards. Not only do these enterprises need to continue to embrace innovation in card production by employing the latest encoding and security features, they must also closely manage physical access to their facilities, to ensure card security is not compromised at the manufacturing stage. This can come in the form of sophisticated ID authentication, high-quality CCTV and comprehensive screening of staff.
At the next stage of the transaction, retailers and payment processors should also involve themselves fully in the process by making sure that every purchase is closely scrutinised, by verifying all customer details before accepting any transaction. This includes checking address details and card security numbers, as well as investing in software that can automatically track and flag suspicious activity. It’s important to remember that it is not just the card owner’s bank balance on the line here, but the retailer’s reputation. In a world where negative customer feedback can be shared at the click of a button, via numerous social media channels, retailers must do all they can to ensure vigilance. Once lost, a customer’s trust is not easily regained.
Of course, the customers themselves also have a responsibility towards the safety of their own information. Contactless card holders must remain cautious at all times, maintain close relationships with the bank and never be afraid to report any suspicious activity. It sounds simple, but many are guilty of carelessness when it comes to protecting their contactless cards from opportunistic thieves.
With contactless well and truly established as a useful means of payment, the detection and elimination of fraud must rise to the top of the agenda for banks, manufacturers, retailers, consumers and payment processors. Just because it is easy to tap and go, contactless shouldn’t be seen as frivolous fun. Ultimately, real money is being transferred with each transaction as with every other method of payment, however small the amount. Complacency here is just as much of an enemy as the fraudsters, and shrugging off responsibility is not an option. Everyone involved in the process has a role to play and it is crucial to ensure consistent innovation in card manufacture, continued investment in innovative detection technology and faultless monitoring of transactions.