Do You Need a RFID Wallet? (or a Tin Foil Hat)

Related Articles: Credit Cards Wallets (Complete Gift Guide)

As magnetic stripe technology is being phased out due to its outdated and insecure nature, chip-based technology has slowly begun to take hold.

This form of technology is often dubbed as Near Field Communication, or NFC.

For the remainder of this article, NFC and RFID are used interchangeably. (RFID=NFC)

If your card lacks this symbol, even if it is chip enabled, it does not have RFID technology integrated with it.

Most Credit Cards Not Using RFID Technology

Take out your credit cards and have a look for this symbol. Don't be surprised if your cards don't have it, most credit cards use newer, more secure technology these days.

Please note: simply having the gold chip on the front of your card, does not mean it is RFID.

Is it NFC Technology Safe?

Overall, yes. NFC technology is demonstrably more safe than magnetic stripe technology and generally secure on their own. Each transaction using NFC technology is encrypted individually.

Just like when you pay using your web browser, the data transmitted by an NFC transaction will be hard for people to hack or interpret.

While there is a possibility, however small, that someone could theoretically steal your information through your wallet, this is extremely unlikely.

For one, the thief would have to be unnaturally close to you to attempt to make a transaction with your card from inside your pocket, almost touching you, even.

It would be more viable to simply steal someone's wallet like this, rather than spending large amounts of money on sophisticated technology that will, at best, work only half the time.

Instead, a much more real fear those with NFC-enabled cards should have is accidentally paying for things while you pass by a terminal. Though still uncommon, it's a much more likely scenario to encounter in the real world. Worrying over it extensively, though, is a bit unnecessary.

In short, if you really do fear the prospect of RFID thieves, it's better to save your money and use a DIY solution for mere pennies. (watch above video)

ATM Skimmers

ATM skimmers (those that place a fake but authentic looking cover over an ATM card feeder to steal credit card numbers) are a much more prevalent and real threat that you should be on the lookout for. It's much less likely these same people will attempt to steal from you in person, though.

What Are the Alternatives?

EMV, short for EuroPay, MasterCard, and Visa, is the standard by which credit card chip transactions are held. This form of technology is similar to RFID technology, though only on the surface. In reality, the closest these two forms of technology have in common are that they are encrypted and that they are chip-based.

EMV Versus NFC

Unlike NFC chips, EMV chips cannot function unless touched to a scanning surface. This can be seen as a trade off between convenience and security, but there's really no lack of convenience in this equation.

Unlike with an phone app that would allow you to pay for things with the use of a phone's wireless connection and the press of a button, an RFID-enabled credit card has the same convenience as an EMV credit card. For both, you'll still need to take it from your wallet and place it close enough to the terminal to pay as you would if you swiped or inserted it.

Additionally, the best security feature of EMV chips is their method of encryption. EMV chips use a form of dynamic encryption, creating a unique ID number for each transaction that takes place using that card.

Even if a thief were able to steal a card's data in a similar fashion to RFID skimming, they would be completely unable to use it, as that ID number was generated specifically for that "transaction" and will not work a second time for anything else.

Extra Security Layer

Many places, especially in Europe, even have a further layer of security used for EMV cards known as the "chip and PIN system". With this system, transactions will be carried out first by inserting a chip-enabled card into a scanner.

Once the chip has been identified, the user must input a specific PIN number to authenticate their identity and approve the transaction. This makes it even harder for someone to use your credit card for elicit means, even in person, as it would now require a two step authentication process before any money could be exchanged.

Not only that, EMV cards were designed specifically as a way of combating credit card fraud. While no method of transaction will ever be 100% immune to fraud, the multitude of security measures in place that EMV cards can make use of mean these chips may just be the safest means of exchanging money in the modern world outside of direct cash transfer in person.

NFC technology simply does not have the same number of ways to prevent fraud, nor are the ways it does have as secure as EMV technology.

What Are the Dangers of EMV Technology?

While EMV technology is extremely safe and reliable, it is not without downsides. Fortunately, many of these downsides are caused by external factors rather than the EMV chips themselves.

Most prominently, the security measures of EMV chips like uniquely generated ID numbers for every transaction cannot work unless a terminal scans the card's chip.

If you're shopping at a store that does not have terminals new enough to accept chips, you will be forced to simply swipe your card with the magnetic stripe. Though this problem will be seen less and less as time goes on, it is still prominent enough today to warrant frustration.

Additionally, there are also vendors that have yet to implement the chip and PIN system of transaction, relying on the much less reliable chip and signature system.

With this system, a chip must still be scanned from an inserted card, but rather than a unique PIN number, all a person must do is sign their name for a transaction to go through. As there is no real method in place for detecting a "fraudulent" signature, this method is not as secure as matching your EMV chip with a PIN number.

As for problems with the cards themselves, one hurdle that EMV chips have yet to overcome is card-not-present transactions; i.e. inputting your card information without the card itself.

Card Not Present Transactions

This occurs most often when ordering something online or over the phone. As there is no scanner present to detect a card's EMV chip, there is no way for the same security measures to be taken during these kinds of transactions.

In these cases, you simply have to rely on the security of the websites you visit as well as a potential thief's reluctance to pair any form of illicit online ordering to their home address.

Passing the Buck

Though it likely won't affect a credit card holder personally, another downside to EMV chip technology is the passing of blame from card provider to merchants. Prior to an industry-wide switch in October 2015 to chip-enabled cards, any provable credit card fraud would most likely be paid by the party issuing the credit card, as it blame was placed on them for not having secure enough system to prevent such fraud. 

However, following the switch to chip cards, companies have taken to blaming merchants who have not yet upgraded to chip reading terminals regardless of ability to do so, forcing them to pay the cost of fraud for seemingly not adhering the most recent technology.

Experts also warn that new methods of defrauding EMV chip technology may be in development for the future. While little information exists as to what these forms of technology and thievery could be, it is important to remain up to date on new information and to always remember that no form of security, no matter how all-encompassing, will ever be entirely foolproof.

RFID and EMV Usage

As mentioned previously, it has become standard to include a chip of some kind within credit cards issued after the October 2015 switch. As such, usage for both RFID and EMV chip technology has increased rapidly within the last few years. Businesses have slowly adapted, as well, updating their terminals to accept chips as well as magnetic stripes for increased safety.

However, it is important to note that RFID technology is actually seeing a decline in usage, at least within the realm of credit cards. This is due to the security risks discussed previously.

Though they are minimal, many companies do not wish to risk thieves stealing from them by simple proximity, especially in a future where such technology is more commonplace. Most consider it simpler and safer to use EMV chips, working to implement the chip and PIN system more universally (for example, most banks have taken to using this system for security reasons).

Conclusion

Though the threat of theft is always present, the risk of someone stealing your credit card information via an RFID signal is minimal. If your card utilizes RFID technology, there are many simple safeguards you can use to prevent any danger, the most effective costing little more than the price of a roll of aluminum foil.

Additionally, a more recent development within the security world is the usage of phone apps as a means of payment.

ApplyPay

Apps like ApplePay are more secure than either NFC or EMV chip technology, as they don't involve your credit card at all. Through a process known as tokenization, these apps generate a random, unique number in place of the credit card's own number it represents, allowing transactions to happen without your card's actual information being presented at any point. Combine this with your phone's own security measures and it becomes a nearly impenetrable method of securing your data.

All in all, though, you have little to fear in the way of RFID fraud. Making sensible choices about the websites you visit and being somewhat alert while in public can save you from most forms of credit card fraud you yourself could prevent. Rest assured that, whether your card utilizes a NFC or EMV chip, you're already much safer than in the past.