Contactless payments are arguably the most widely adopted innovation in banking in recent years. The problem however, is that with this innovation, change to payment process is essential to ensuring customer security.
Where Neobanks have the right idea, is that they put the customer in control. OK, the price we pay for convenience of an instant payment is weakened security, but at least this new generation of banks puts the end user back in the driving seat. Lost your card? Freeze it in seconds. Someone using your card? Get an instant notification on your phone telling you where they made a purchase and how much that purchase cost.
From a personal perspective, my own purse was stolen just a fortnight ago. The contents included both my Revolut and my traditional bank cards. The pick-pocket used the traditional bank card almost exclusively - presumably wise to the fact that I would not be notified to the dozens of fraudulent transactions they had made. Where they slipped up was one tap of the Revolut and I was instantly prompted to turn my handbag inside out looking for the stolen purse.
As martyncjames1, from complaints firm Resolver, said, contactless payments are “a dream for a criminal who sees an opportunity for some fast cash. Shoppers have become more complacent and banks need to do more in turn to detect fraudulent behaviour on contactless cards.”
Will opportunists stop stealing if we use technology to make their sprees shorter-lived? No. But it will greatly reduce the damages incurred to both customer and financial institution.
By traditional banks progressing in line with Neobanks, they will ensure their future survival in a world where the only option is to innovate or die.
“Banks have encouraged customers to use these high-tech cards as a quick and easy way of paying for small amounts of shopping, but critics have warned that they allow fraudsters easy access to someone’s account. A total of £14 million was stolen from contactless cards and devices in 2017 – up from £6.9 million the previous year. Experts said some of the increase in fraud may be down to opportunistic thieves – people who find a missing card and would not try to guess its four-digit PIN but can now use it for payments under £30 using contactless technology. The total amount spent using the tap-and-go system doubled from £25.2 billion in 2016 to £52.4 billion last year. Meanwhile, in the past two years, the number of fraud cases involving credit and debit cards has gone up by 565 a day to 959.”