American Express and Visa have announced contactless transactions changes to ensure those who cancel their cards are protected against contactless fraud.
These actions follow calls from the UK’s Financial Conduct Authority (FCA) for banks to tighten the processes they undergo when a customer reports a stolen contactless card. According to FCA, the currently security processes when a customer reports a stolen contactless card allow for the card to be misused by fraudsters “several months after it has been cancelled”.
As a consequence, the key risk to customers occurs when merchants process payments offline and store them in a batch to process later on. At present, around 45% of contactless card transactions occur offline.
The FCA set out last month a series of measures it plans to undertake in order to tighten the processes banks undergo when a customer reports a stolen contactless card. These include removing the dependency on customers to identify fraudulent transactions, improving customer communications at the time of cancellation and providing clarity to customers on the clearing times for contactless payments.