The Atlanta Federal Reserve wants to put an end to erroneous fears over the security of mobile contactless payments, reports American Banker.
According to the bank, a mobile device provides greater security than a common magnetic stripe credit card in that the device itself can be used as an authentication tool. For example, most if not all phones let the user set passwords or other authentication measures, and many others support GPS technology, which can be used to verify location.
Additionally, Cindy Merritt, assistant director of the Fed’s Retail Payments Risk Forum, says that mag-stripe cards are becoming “increasingly obsolete” and “vulnerable to fraud.”
Merritt also concludes that current misconceptions about mobile payment, i.e. that it is unsafe, reflect those voiced at the onset of online payment, and that these concerns will disappear in the next few years as the technology sees wider adoption.
In the meantime, the Atlanta Fed is working to get the word out through its Rails and Trails blog – the same venue it used to push for EMV migration in the U.S.
“One of our main goals is to work with bank regulators and law enforcement agencies as they investigate payments fraud and other risks that threaten the banks’ operations and financial stability,” writes Merritt. “Working to get them educated so that they can approach their responsibilities knowledgeably is critical right now because over reacting can threaten innovation—so we’re working on getting them the information they need to strike an appropriate balance.”
Read more here.