Friday, June 29, 2007
Fed Questions Contactless Payments
From InfoWorld Fed Questions Contactless Payments
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.
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.
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.
"Adoption is growing at a faster rate than any other payment technology introduced in the last 50 years,".