Don’t panic. Credit card companies remain as committed to capitalism as they always have been. But you might imagine otherwise if you were to believe some of the hype surrounding the introduction of contactless payment cards. These are the ones with tiny radio frequency identification (RFID) transmitters that constantly broadcast account details so that they can be picked up by those newfangled card readers in shops and restaurants that don’t require you to swipe your plastic or let your card out of your sight.

According to one recent press release, there are set to be a billion of these cards in people’s wallets by 2016, and they “will dramatically increase the public’s susceptibility to identity and financial theft from electronic pickpocketing.” Now that’s what you call a redistribution of wealth.

ABC, CBS, NBC… your contactless credit card

The CEO of the company that issued that press release commented:

We now know the industry is moving toward one billion contactless payment cards by 2016, and that’s a scary prospect for the public, considering the serious security flaws in these cards that remain easily exploitable and inexplicably unaddressed.

And he’s sort of right. But his remarks were put into context by a paragraph at the end of the press release, which revealed that his company “is the leading provider of RFID security sleeves and badge holders to the U.S. government, and offers a full line of consumer products from card and badge holders, to purses and wallets.”

So the guy’s selling something. Nothing wrong with that, but it does suggest he has an ax to grind.

Unsecured credit cards?

So to what extent do contactless RFID-enabled cards give a whole new meaning to the term “unsecured credit cards?” Well, there is a threat. In March, Nevada’s attorney general issued a warning about them:

Thieves can steal this information by using a frequency reader. These readers are inexpensive and easy to obtain. The thief can simply walk next to you and acquire your credit card number and expiration date without any physical contact. While these cards are in your wallet or purse they can transmit your card or passport number and in some states, your digital drivers’ license information…

That sounds pretty worrying, but electronic pickpockets would have to get very up-close and personal with you to steal your card details. MasterCard says that, even at an official terminal and with your card out of your wallet, you need to hold it “extremely close to the reader” for it to work. And you can protect yourself by keeping your contactless cards in sheaths (or sleeves) or sheathed wallets and purses that block the signal. Many banks and credit card companies provide sheaths free when they issue these cards, and they’re also widely available to purchase.

More highly secured credit cards?

Indeed, some argue that contactless products actually represent the best “secured credit cards.” MasterCard suggests that the RFID-enabled cards generally use high levels of encryption. And, of course, the card never has to leave your possession, so it’s impossible for a clerk to “skim” one under the counter and then clone it.

So there’s no need to panic. Not only is it easy to protect your card information, but also credit card companies haven’t suddenly become socialist conspirators.

Published 09/15/11 (Modified 04/20/12)