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Credit Card Applications » News » Other » Risk of fraud higher on newer credit cards

Risk of fraud higher on newer credit cards

June 24, 2010 | Updated on June 24, 2010
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The content is accurate at the time of publication and is subject to change.

Cyber security experts have warned the banks and consumers alike that the most recent credit cards being issued by the lenders have a lot of privacy and security concerns since they are designed in such a way that even the air can scan them.

The 'contactless' Visa and Mastercards that were being used only by Canadian customers till date, has now been made available to people from various parts of the world as well. The big players in the credit card industry are now issuing these cards to their new clients.

An RIFD tag, commonly called as the radio frequency identification chip is embedded in these new credit cards. The card has been designed such that the clerk at the payment counter need not swipe the card to charge it. The card just needs to be waved in front of a particular machine that will recognize the chip and charge the card with the amount specified. This is done by the use of radio waves.

Pablos Holman, a cyber security expert in the United States, said that this is the fundamental cause for concern. As RIFD card reader can be purchased by any person easily since it is easy available and also affordable. A second hand card reader can be purchased from stores at just a merger sum of $10. This can be a reason for celebration for criminals since they can purchase these machines and read the card in public without the knowledge of the customer.

Holman went on to say that unlike what they were expecting, these sensitive cards do not even carry any encryption. Hence, anyone who has the card reader and can download the open source programs available on the internet can easily abuse these cards.

Mastercard launched the RIFD cards in the market in 2006 when it was aggressively being marketed to the Canadian consumers as PayPass cards. Scott Lapstra, Mastercard's Vice President for market development in Canada went on to say that till date, close to 90% of the Mastercard holders in Canada carry these cards and the company plans to reach 100% by the end of 2010.

Though there are such cards being marketed by Visa as well, they are being done at a slower pace and has the brand name, PayWave.

The credit card companies, however, claim that these cards can be beneficial to the consumers since it reduces the time spend fumbling for cash and makes way for convenient and comfortable shopping experience.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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