Contactless Card Fraud Has Doubled
The UK’s fraud reporting service, Action Fraud, has reported that contactless card fraud doubled in 2018 to £1.8m stolen compared with £711,000 in 2017.
Average Theft Amount Increased
The latest Action Fraud figures have also revealed that the average theft through contactless fraud in 2018 rose to was £657, compared with £493 in 2017.
Back in February 2017, figures from UK Finance showed that contactless card fraud had already overtaken cheque fraud, prompting finance experts to warn banks against raising the £30 limit for payments, to avoid incentivising more criminals to steal them.
Contactless cards incorporate a special chip that can be read quickly and easily by a payment terminal (without making direct contact), meaning that entering a PIN is not necessary, thereby speeding up transactions.
How Can Hundreds Be Stolen? I Thought It Was Only Up To £30?
Current rules mean that only payments of up to £30 can be made using contactless technology, and as such, many of the contactless thefts have involved the thieves taking multiple small amounts using the same card so that users don’t notice immediately.
Why The Doubling of Contactless Card Fraud?
Many commentators believe that the simple fact that contactless is overtaking chip and PIN as the most popular way of paying for goods and services now, and that a PIN is not required to use a stolen card are the main reasons why contactless card fraud levels have soared.
Worldpay figures, for example, show that more card payments were made using contactless technology than chip and PIN in the UK over the year from June 2017 to June 2018, and that after increasing by 30% on the previous year, contactless payments are now the most used card payments in shops. Yolt figures show that 76% of Britons have used contactless payments, and 40% make half or more of their card payments using contactless.
Even though UK Finance, the body which represents many banks, is quick to point out that no contactless fraud has been recorded on cards still in the possession of the original owner, contactless cards have robust security features built-in, and that customers are fully protected against any losses from contactless card fraud, the Action Fraud figures still appear to show a security problem.
This problem has not gone unnoticed by consumers. For example, even though many of us are now used to having and using contactless technology, MoneySuperMarket research from as recently as last September showed that 55% of those surveyed had concerns about the security of tap-and-go technology.
What Does This Mean For Your Business?
For businesses, contactless payments offer the chance to reduce the cost and hassle of having to handle cash, cut queues, increase the speed and hopefully the frequency of transactions (increase footfall), increase average transaction values (ATV), provide a clear audit trail and assured payment, and even (for some types of businesses) the chance to change to better business models e.g. card / contactless only cafes and bars in cities. For customers, contactless offers a better, more convenient and faster retail experience for the majority of their purchases (£30 and under), which in turn has a positive rub-off value for retailers.
The prevailing trend in developed countries is a move away from cash to cards, and particularly contactless. For example, UK Finance projects that in Britain cash will be used in just one-fifth of all sales by 2026, and Paymentsense has reported the removal of 4,735 cash machines in the last year.
Even though customers may be protected (i.e. re-reimbursed later) if their card is stolen and used by fraudsters, it is still an unpleasant experience to have money removed from their account that can cause financial hardship in the short term and can affect their ability to pay important bills and could have a negative impact on their credit rating. The Action Fraud figures appear to show, therefore, that there is a growing problem with contactless card fraud that banks are not yet fully tackling.