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Devil's Advocate

Roger Elwell - Yes Please

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Barclays to move to contactless debit as standard

06 January 2009  |  12424 views  |  2
barclayonepulsecard.JPG
The UK's Barclays Bank says that from March most Barclays debit cards that are issued or reissued will have contactless technology built in as standard.

Contactless Without A Choice...?

06 January 2009  |  4723 views  |  5

Interesting development by Barclays in adding contactless technology to all their debit cards.

I wonder whether they are planning to offer people the option to opt out of the card type, i.e. have a debit card without the contactless capability...?  I think that's the choice I would like to make at this point until I understood how safe it was on the one hand and what data I was going to get about the individual transactions I might make in due course on the other.  As I mentioned in an earlier blog (Deliver My Statement In A Wheelbarrow), I'd be wanting full disclosure of all transactions and therefore I'd expect my statement to grow significantly in length (and therefore pages) over time.  Does this make sense from either a cost or enviromental perspective?

I know this is a bit irrational but I still have this image in my mind of going shopping (remember shopping?  That activity we all did before the recession...) on a Saturday and getting my statement at the end of the following week to find I inadvertently 'spent' a shed load of money as I walked past tills.  The lack of any overt signal from me that the transaction is valid still worries me.  In my old capacity as a card product manager, I would also be worried at what contactless is going to do to my fraud and other dispute losses, as I understand that the issuer will take the losses resulting from disputes.

It'll be interesting to see how this plays out, especially as I still don't see how this technology will get rid of cash for the forseeable future, and if it doesn't do that, what is the capability for?

TagsCardsRetail banking

Comments: (7)

Dave Barnes
Dave Barnes - . - Edinburgh 07 January, 2009, 16:52

Your right, it's irrational. :-)   I'm surprised that someone who works in the Cards industry is concerned about the introduction of a service such as this.

Barclays, like the other banks that are offering this service, have put in place processes to deal with all of your points.

·      These are very short range devices that can transmit and receive over a few centimeters, so need to be near to the tills.

·      The tills need to have a transaction ready before you use your card.

·      The limit for each non-verified transaction is very low and there is an overall limit before verification is required.

·      There is also random verification to help reduce losses further.

On the other point, doesn't your bank offer paperless statements yet? If not, you should move to one that does.

The use of contactless cards for me has been limited as the trial i've been involved with has a limited amount of places where i can use it. Even so, the benefits of not needing to enter your pin are obvious to everyone that uses it and i'd predict that in the future as more and more shops have the capability, that this will become the most common way to spend your money.

Shops, vending machines and even street vendors will start to use this technology en-mass in the very near future and it will absolutely start to get rid of cash. It won't completly get rid of it, but its a step along the road.

 

Dave

 

 

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A Finextra member
A Finextra member 07 January, 2009, 19:34

Debit card transactions + mobile transaction unit with deliberately increased range = an incentive to abuse this system!

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Roger Elwell
Roger Elwell - Yes Please - Colchester 08 January, 2009, 09:08

Dave:

You are making a number of assumptions, e.g., that someone, somewhere, will not devise a means to activate the RFID from a longer distance and extract money.

Yes, I'm sure my bank does offer paperless statements, but I don't want to use them.  Also shed loads of people don't do internet banking, and won't for many years to come, so their paper statements will continue and will become more bulky - unless the institution doesn't plan to provide a transaction-by-transaction breakdown, the absence of which will turn me off using contactless immediately.

Also, I can imagine a significant increase in the number of disputed transactions, which I think could well lead to either a) increased losses for the banks or b) increased costs of handling these disputes or c) increased dissatisfaction from customers when they find (if it proves to be the case) that their dispute(s) is/are rejected.  If that happened to me, I'd definitely want the functionality switched off as I wouldn't be using it again.

Do I get a card transaction receipt when I undertake a contactless transaction?  How easy will it be for me to reconcile what's been debited to my bank account?  I think there are quite a few parts to the proposition that need to be more clearly thought through and articulated.  I do know, from the bank I used to work in, that many of these questions were unanswered and I suspect remain so.

That's why I think this is a bit premature.  However, if the cards industry is determined to press ahead, I do hope it has properly considered both the positives and the negatives/potential problems before diving in.

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Nick Green
Nick Green - ISD Consultants - Northampton 08 January, 2009, 10:24

Rodger,

Receipts - the scheme rules say you have to have one if you ask for it. A contactless transaction will not 'normally' from a standalone terminal give a reciept but all yo have to do is ask and you may even still have the EPoS system reciept as well. So if you want a receipt per transaction you're covered.

Statements - A contactless transaction is like any other Debit or Credit card transaction and will result in an entry on your statement. The number of entries will depend on how often you chose to use your card instead of cash - just like today really. Yes this may mean that there may be more entries in the future because you have chosen to use a card instead of cash and the industry is looking at transaction aggrigation so that the news agent you buy your week day paper from can submit one transaction for the week and report it on the statement as 5 transactions at 45 pence £4.05.

Remote 'Stealing' from cards - this is not an electronic wallet so there is no 'value' on the card. The only option for the fraudster with his back pack of batteries an big aerial to generate enough RF power to activate the card from a distance will have to launder the transaction through a colusive merchant - the business case for the fraudster (effort vs return) is not good. If the paranoia sets in [just because you are paranoid doesn't mean they aren't out to get you] you can always buy one of the mini Faraday cages to put your card in that stop them working contactlessly. When the 'card' can be 'loaded' into your mobile phone there will be the added advantage that the 'contactless application' can be switched of until you decided to turn it on to make a payment.

Getting rid of cash - it will be a long time before cash disappears [if ever] but this allows the card payment process to move into lower value transactions and to make them faster, being able to always have the right money for the 'pay and display' and to get a Starbucks [other coffee shops are available] without first having to go to the ATM.

Nick

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Roger Elwell
Roger Elwell - Yes Please - Colchester 08 January, 2009, 11:34

Thanks, Nick.

I guess one of the main issues is going to be that of perception, but just as equally we need to be careful that we don't assume too much about whether fraudsters can make something of it.  Confidence is a key for financial services (look at what's happened recently) and, having spent loads of time convincing people that their cards are secure if they use chip and PIN, it will be a big task to convince them that something which they perceive leaves their bank account potentially 'open' without them even to have to remove their card from their wallet is really safe.  We work in ths FS industry and are well capable of rationalising these things, but we should remember that most people aren't.

I'm still interested to understand how issuers think the transaction dispute process will work (from the customer making the complaint to its final resolution).  People will query transactions they made and it will be interesting to see what issuers will do, especially bearing in mind the costs of processing such complaints/queries.

Also, whilst I accept that the industry might be looking at transaction aggregation, it should also recognise that people might not accept it.  If they don't (and I don't think I would), then I guess either a) there will need to be a rethink of the proposition or b) they accept that people won't use it.

At the end of the day, I think the industry needs to have a very clear picture of how this will work (including the financial aspects - costs and income), in practice, from all perspectives - theirs, the retailers, cardholders, regulators and fraudsters.  Maybe this has been done, but I remember from close inspection a couple of years back that it certainly wasn't then, and when I speak to some people in issuing and acquiring it seems there are still a number of loose ends that might not make it work.

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Richard Self
Richard Self - University of Derby - Derby 10 January, 2009, 10:54

One solution would be the development and sale of Faraday Cage credit card holders / wallets which will prevent most or all the RF energy reaching RFID cards until removed from the holder. This will just require a metal foil lining to the holder. To see an example of this in action look at the fine grid on the inside of a microwave oven window which prevents the microwaves escaping from the oven. Is this a potential business opportunity?

This will also be required (at least for the somewhat paranoid) for any future identity card and even now for the RF active passports.

Prevention is always better than a cure after the event.

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Joe Pitcher
Joe Pitcher - Irrelevant - Wirral 10 January, 2009, 18:32

"One solution would be the development and sale of Faraday Cage credit card holders / wallets which will prevent most or all the RF energy reaching RFID cards until removed from the holder. This will just require a metal foil lining to the holder. To see an example of this in action look at the fine grid on the inside of a microwave oven window which prevents the microwaves escaping from the oven. Is this a potential business opportunity?"

 

To see another practical example of this look inside the schoolbag of countless children in Liverpool (and other cities i'm sure).... I moved to Liverpool 15 years ago and was stunned by the number of tin-foil schoolbags I saw - great for avoiding detection when shoplifting.

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Consulting to the financial services industry with a specific expertise in the cards business - issuing and acquiring.

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