J.P. Morgan Chase & Co., the nation's #2 bank and leading issuer of credit cards, has announced it will issue new "contactless credit cards" to its account holders beginning June 1. The new cards can be "waved" in front of a special reader instead of being swiped through a traditional credit card terminal.
The new cards will contain a special chip which can be read by the merchant's card reader. The reader will emit a beeping sound to signal that the transaction has been authorized after the customer "waves" the card in front of it. Chase has about 94 million credit cards in circulation and is the first to issue both Visa- and MasterCard-branded cards with this new "blink" technology.
In a statement by Carter Franke, chief marketing officer of the credit card division, Chase states "We believe these innovative cards with blink will provide merchants and cardmembers with the increased speed and convenience they want at the point-of-sale."
Personally, I have a major security concern with this new type of credit card technology. These new cards will not require a customer's signature, which to me is a big red flag. Call me a "fuddy duddy" if you like, but I feel safer signing my receipt and having a clerk compare that signature with the one on the back of my credit card.
A contactless card doesn't require this verification step. What happens if my card gets lost or stolen? Will I be held responsible for unauthorized charges? And how will the merchant know, without my signature, if the charges were made by me or by someone pretending to be me, like an identity thief?
Credit card companies are encouraging merchants to embrace contactless cards as a way to make more transactions. More transactions = more sales = more money for both the merchant and the credit card companies. The cards are also being marketed to younger customers; consumers who tend to buy on impulse and easily adopt the "buy now - worry about how to pay for it later" attitude.
The credit card companies will advertise the convenience and timesaving aspects of these new cards. They''ll highlight the fact that with new "wave" t echnology the credit card never has to leave your hands so there is less chance of losing a card or having it stolen.
I don't know ... are the credit card companies really that concerned about my convenience and saving me precious minutes of my time? Or are they just reaching out to a younger demographic with limited knowledge of how credit really works and thus entangling another generation in their web of credit card debt?
Wise consumers, young and old alike, would do well to watch their spending habits as this new technology is rolled out. Those who have their spending and credit habits under control have nothing to fear. Those who don't, will fall deeper in debt in the "blink" of an eye!
RE: Consumers, Beware the New "Wave" of Credit Cards
By MikeS (Guest Post)
Thinking that cashiers are matching your signature on the charge slip to the back of your credit card is false security. How many times have you actually seen someone pay enough attention to the signatures? It doesn't happen. Credit Card companies are trying to supply innovations that are convienient so that consumers will come to them instead of their competitors. It's Free Market innovation with the Invisible Hand helping the consumer, the bank and the merchant. In the near future, that blink technology will be in your cell phone or in your watch (as is being done in Turkey by Garanti Bank). Banking regulations require the credit card issuer to cover fraudulent charges, so I assure you that they will make all new technology safe - maybe safer than relying on a cashier to be a part time handwriting analyst.
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