Fed weighs future of contactless payments

You can call it 'cash 2.0': a new age of wireless payment technology that may replace even the smallest cash transactions in the coming years with the wave of a credit card or mobile phone. But as major corporations like CVS, McDonald's, and Walgreens begin deploying new RF, or "contactless," payment technology, the Federal Reserve is taking a closer look at the technology and is asking the payment industry and card companies, among other questions, whether the new payment systems are secure.

The rapid deployment of RF-equipped contactless payment technology was behind a meeting at the Boston Federal Reserve in May. According to interviews with those at the meeting, the payments industry argued that, while not foolproof, the new RF payments systems are a vast improvement over existing, "magnetic stripe" payments technology and that Americans' casual handling of their credit cards poses a far greater risk to sensitive financial information than wireless hackers that might target the cards. Contactless payment technology uses RF technology embedded in credit cards, mobile phones, or USB devices to negotiate credit and debit transactions. As opposed to older generation magnetic strip technology, the RF cards can be waved in front of a card reader.

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News source: InfoWorld

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Just like at the start of this decade companies could watch their share price jump 25% simply by adding '.com' to the end of their name, the new fad is to add '2.0' to as a way of showing how ahead of it and pushing the boundaries they are.

While RFID is an excellent technology which is very useful in logistics and inventory management, I don't think it is suitable for payment. There are many security issues that have to be addressed. How customers are supposed to confirm the transacation? There must be more interaction between the cashier and the customer than just waving the card in the air, otherwise all hackers have to do is send amplified signal so it reaches your card in the pocket and withdraws money from it. What happens if you lose your card?

Using finger prints is the best payment method I think. There are no cards, nothing can get stolen, lost, left at home and must be really hard to forge. However, there are concerns with privacy too. People generaly don't want to be voluntarily finger printed.

Zhivago said,
People generaly don't want to be voluntarily finger printed.

OK, what is wrong with the above sentence, apart from the single l in "generally", and the space between "finger" and "printed"?

There are two distinct ways to compromise fingerprints:

1. Fake finger-- ranging from a photo, to a cast, to a cut-off digit.

2. Trick reader. Capture the datastream from sensor to device, and you can replace the sensor with a device that repeats it whenever you want.

Why does Contact-less = micro-payments? Credit card companies could accept smaller payments on cards just by reducing their charges... Contact-less cards are inherently insecure, as someone can take your money without you doing anything, and without you even being aware.

If you have to touch the card to something then type a pin or something, it hardly improves the existing system does it?

Love it myself, use my AMEX Clear for that reason mainly, can just wave my card and keep going. I rarely ever have cash on me now a days unless I'm going to a club and need to tip.

Can't wait until all places have the wireless setup

umm...why? As cool as quantum computing would be such is it's potential power that all forms of encryption are meaningless. Quite what it has to do with contactless payments is beyond me.

lol... so now I don't have to worry about people putting covers to strip magnetic info - I just have to worry about them standing too close to me.