Americans pressed for time may be enticed by the prospect of owning a credit card with a PayPass feature. Cards that are PayPass-enabled utilize Radio Frequency Identification (RFID), that allows the cardholder to transmit their information in the air to complete the transaction. Signing receipts and swiping your card on a physical device are no longer a necessary part of the payment process. On the surface it sounds like a clever way to save time, but there are several dangers of using a credit card with PayPass that you should consider before using the device.
Beware of PayPass
By eliminating the basic act of signing a receipt, the defense for preventing unauthorized users from accessing your account is diminished. Many times the sales staff ringing up your purchases will ask to see a second form of ID to to verify that the signatures match and that you are indeed the legal cardholder. If you do not have your second form of ID, they can simply say they cannot complete your transaction. But those attempting to use your card for fraudulent charges now have a plastic magic wand they can just wave, increasing the risk of credit card fraud targeting both consumers and retailers alike.
The Radio Frequency Identification technology embedded in PayPass credit cards is an extremely cheap information transmitting system often used for automated toll booths, inventory tracking and car security systems as they do not require physical contact to activate and use. Devices that can read your PayPass information are widely available for under $10. At that price point, criminal minds are happy to make the initial investment as they can easily swipe your credit card information just by waving the RFID reader by your wallet or purser.
Although consumers may not be too concerned about credit card fraud because the Federal Trade Commission limits the cost to the card holder to a maximum limit of $50, they should be. Last year, online credit card fraud account for a $4 billion loss to the credit card business. Ultimately, consumers will be charged higher interest rates, fees and even higher retail prices to make up for the financial loss.