Contactless credit cards: future or folly?

About this post

Jack Han investigates the new wave of shopping technology with contactless credit cards.

January 20, 2010

Millions of credit cards with new technology have rolled out onto the Australian market and into our wallets. Many experts have heralded the contactless credit card as an evolutionary step in card technology, allowing us to pay for small purchases in more convenient ways, while others are raising concerns about the vulnerability of these cards to skimming and other cyber crimes.

Contactless credit cards have already been distributed to more than three million Commonwealth Bank customers, in partnership with MasterCard, while ANZ, Macquarie Bank and National Australia Bank customers will soon be offered contactless Visa credit cards.

Growing popular in the US and the UK, these new credit cards are becoming more and more widely accepted here in Australia, with thousands of outlets, such as 7-Eleven, accepting this payment option.

They are designed to provide a convenient alternative to cash for shoppers who normally resist using credit cards for smaller, everyday purchases. By simply scanning or sliding these cards at the cashier, many Australians have discovered a new, hassle free way of shopping.

Even though it is estimated that cash transactions make up 65-70 percent of the total transactions in Australia today, contactless credit cards could be the technology that replaces cash for good.

Many contactless credit card users may not be aware that their cards contain the new technology, which has sparked fears that thousands of Australians have become vulnerable to new forms of card skimming.

While financial institutions deny that the cards are more vulnerable to skimming than their old counterparts, in the United States, a study conducted by researchers at the University of Massachusetts demonstrated how easy it was for criminals to transfer data off of contactless cards. Using readers, the team was able to effectively steal card numbers, expiration dates and cardholders' names.

So how can you protect yourself from the new wave of card skimming crimes? The most useful thing to do is learn about your card from your provider. By learning about your card’s anti-skimming features, you can determine whether a contactless card suits your lifestyle, and whether it is a suitable alternative to carrying cash in your wallet.

Chances are your credit card could already be equipped with the latest in electronic payment technology. But before you shop, look around online for the best rates and features to see if your high-tech card really measures up to all that 2010 has to offer.



Related Links

This is an information service. By browsing on the website and/or using our search tools, you are asking RateCity to provide you with information about products from multiple financial institutions. We will try to show you a range of products in response to your request for information. The search results do not include all providers and may not compare all features relevant to you, for further details refer to our FSCG. The rating shown is only one factor to take into account when considering these products. We are not a credit provider, and in giving you product information we are not making any suggestion or recommendation to you about a particular credit product. If you decide to apply for a product, you will deal directly with a financial institution, and not with RateCity. Rates and product information should be confirmed with the relevant financial institution, and you should review the PDS before you decide to purchase. See our terms of use for further details. This advice is general and has not taken into account your objectives, financial situation or needs. Consider whether this advice is right for you.