2 MINUTES ON... Visa's contactless controversy by ProQuest


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2 MINUTES ON...                                                                                               System Experts, contactless
                                                                                                              payments are not necessarily
                                                                                                              more secure than traditional
Visa’s contactless controversy                                                                                payment methods. “There are
                                                                                                              still security problems associ-
                                                                                                              ated with contactless cards.

        fter months of talks          Signature-based authenti-              Contactless transactions         “People have shown during
        with Visa, Best Buy         cation is subject to a higher          are more secure than tradi-        testing that they can extract
        has stopped accepting       interchange rate – the fee that        tional, magnetic stripe debit      primary account numbers out
Visa’s contactless debit card.      merchants must pay acquir-             card transactions, Litan said.     of these devices.”
   Best Buy’s move has              ing banks for card services.           This process uses a dynamic          Despite the possible secu-
security implications and             Card brands encourage                authentication code that           rity benefits, there is likely to
highlights an age-old fight          consumers to use signature             changes each time the con-         be pushback for contactless
between merchants and               rather than PIN-based debit,           tactless card is used based        payments from even more
card brands, said Avivah            even though PIN is more                on a unique algorithm. “The        retailers, Litan said. That is,
Litan, VP and distinguished         secure than signature-based            code presumably can’t be           unless Visa and the other card
analyst at Gartner. The con-        authentication, Litan said.            replicated properly if some-       brands make this method of
sumer electronics retail giant      “Retailers want PIN-debit              one steals the information on      payment more economically
made the decision because           because of lower fees and              the contactless card.”             attractive to retailers by low-
Visa is forcing merchants to        higher security, and the card            However, according to            ering their interchange fees.
use pricey signature-based          companies want signature-              Richard Mackey, VP of net-         In the long run, card compa-
authentication with contact-        debit because of higher fees.”         work security consultancy          nies will have to find a more
less transactions, as opposed                                                                                 secure payment method that
to PIN authorization, which                                                                                   U.S. retailers will be willing
is cheaper for retailers.
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