Contactless payments have become a staple of convenience in our daily lives. Whether you’re grabbing a coffee on your way to work, paying for groceries, or splitting a dinner bill with friends, the ability to simply tap your card or phone and go is something we’ve all come to appreciate. However, as these payment methods gain popularity, they’re also drawing attention from fraudsters who are quick to exploit new technologies for personal gain. In fact, by 2024, over a billion people are expected to use contactless payments regularly, with transactions projected to reach $10 trillion by 2027.

So, let’s dig into the ways these fraudsters are taking advantage of this technology and what you can do to stay safe.

What Is Contactless Payment Fraud?

Contactless payment fraud isn’t just a simple case of card theft, it’s an evolving set of tactics. One method, for example, involves “skimming,” where a device captures your card’s information from a nearby terminal. Fraudsters may intercept digital wallet details through unsecure networks. As technology powering our payments evolves, so do the schemes used to abuse it.

Here’s a look at the primary methods that fraudsters are currently using:

1. Simple Card Theft: If someone steals a contactless card, they can use it without needing a PIN for small purchases. In places like the U.K., fraud from stolen contactless cards rose by 82% in the past year. Once a thief has your card, they can use it repeatedly for smaller purchases until it’s reported lost or stolen​.
2. Skimming and Relay Attacks: This one is like something out of a spy movie. Skimmers can be hidden in ATMs or payment terminals to capture your card’s details. Meanwhile, a relay attack uses an intermediary device to capture your card’s signals, allowing fraudsters to make transactions even from a distance​.
3. Account Takeovers (ATOs): With so much of our financial information stored in mobile wallets, these attacks are becoming more common. If hackers get access to your wallet app, they can essentially treat it as their own, making purchases or transferring funds​.
4. Mobile Wallet Exploits: Apps like Apple Pay and Google Pay are fantastic for convenience, but fraudsters are always looking for vulnerabilities. They might intercept payment authorizations over public Wi-Fi networks or even manipulate app settings to authorize transactions you didn’t make​.

Who’s at Risk?

The fact is anyone using contactless payments is a potential target. But those who use them more frequently – particularly in busy, urban settings – are at a higher risk simply due to the volume of transactions they’re making. Young, tech-savvy consumers are especially vulnerable, as they’re often early adopters of digital payment solutions.

How to Protect Yourself

Thankfully, there are simple yet effective measures you can take to protect yourself from contactless payment fraud. Here’s what I’d recommend:

1. Set Up Alerts for Transactions: Most banking apps allow you to receive notifications for every transaction. If anything looks suspicious, you can catch it right away and contact your bank to shut down the card or account.
2. Consider Using Digital Wallets with Biometrics: With options like fingerprint or face recognition, digital wallets can offer an extra layer of security. Plus, they’re more convenient than entering a PIN every time you make a purchase​.
3. Try an RFID-Blocking Wallet: If you’re using contactless cards, these wallets are a great way to keep your card’s information safe from skimmers. They’re designed to block any attempts to read your card unless you remove it from the wallet.
4. Monitor Your Bank Statements Regularly: Taking a few minutes each week to scan through your transactions can help you spot any charges you don’t recognize, allowing you to act before it becomes a bigger issue​.

For Businesses: Staying One Step Ahead

If you’re running a business, you’re just as vulnerable to contactless payment fraud as consumers are. Here are some steps businesses can take to stay ahead of fraudsters:

• Use AI-Based Fraud Detection: AI can analyze transaction data in real-time, flagging any unusual activity that might indicate fraud. As fraudsters continue to innovate, AI is becoming an invaluable tool in the fight against financial crime​.
• Require Multi-Factor Authentication (MFA): If you’re accepting payments through a digital wallet, consider adding MFA for high-value purchases. This makes it much harder for fraudsters to authorize transactions without the customer’s consent.
• Train Your Team: Educate employees on what to look for. Fraudsters are quick to exploit people who may not be aware of the latest schemes, so regular training can help reduce the risk of falling victim to scams​.

How RembrandtAi® Can Help Safeguard Against Contactless Payment Fraud

As we’ve explored, the convenience of contactless payments comes with risks, and the tools to protect against these frauds must be just as advanced as the threats themselves. This is where RembrandtAi® steps in.

RembrandtAi® employs powerful machine learning algorithms and real-time monitoring to detect even the most subtle signs of fraud across all digital transaction channels. Whether it’s unauthorized access attempts, anomalies in transaction patterns, or signs of synthetic identities, RembrandtAi® has the capability to pinpoint these issues as they occur. This means that financial institutions can respond to threats instantly, keeping customer accounts secure and ensuring peace of mind for all parties involved.

Moreover, as fraud tactics evolve to leverage AI and automation, RembrandtAi® adapts to these changes through continuous learning and updating of its fraud detection models. By doing so, it enables banks, credit unions, and other financial institutions to stay one step ahead in the fight against contactless payment fraud and other digital threats. With its cutting-edge technology, RembrandtAi® is setting a new standard for fraud detection in today’s rapidly changing financial landscape.

For financial institutions looking to strengthen their defenses against fraud, RembrandtAi® provides an essential layer of protection that meets the challenges of our digital world head-on.

As much as contactless payments are convenient, they do carry risks. The key is to stay informed and being proactive. Fraudsters are always looking for new ways to exploit technology, but with some simple precautions, you can make it much harder for them to target you or your business. We live in an increasingly digital world, so taking these steps to protect ourselves is just part of the modern financial landscape.

By staying vigilant, educating ourselves on the latest threats, and using the tools available to us, we can enjoy the convenience of contactless payments while minimizing the risk. So, tap away – just make sure you’re doing it safely!

Sources:

​Experian Credit Report
Fortifid
SEON
ComplyAdvantage
MicroStrategy