At the end of 2013, the American retail giant Target was hacked, 70 million user personal information and 40 million credit card data were stolen, involving private data such as user names, phone numbers and information card information. Target’s losses are now estimated at $148 million and could eventually reach $1 billion.


Target’s “lost money and shame” incident has brought home to the fact that even the most robust security systems can be hacked. Target’s account is a model, multi-layered system with more defenses than the already stringent security measures at Visa and MasterCard require.

But the hackers got in anyway, sparking an immediate outcry, with people questioning why credit card transactions in the US were not secure enough and calls for contactless cards that don’t require a physical “swipe” through a card reader.

Thanks to this outcry, Visa, Mastercard and Amex have taken a firm stand: Retailers have until October 2015 to invest in readers capable of using smart cards. For those who do not, the responsibility for fraudulent losses will rest solely with them.

After all, smart cards (which contain chips that contain encrypted information and secure processing capabilities, but still need to be contacted) have been widely used in the developed world since 1983, greatly reducing theft. Fraud has taken this long to get to this level in the U.S. Even though it cost retailers and banks more than $12 billion in 2013, compared to the cost and complexity of updating retail point-of-sale (POS) systems, Fraud is obviously much cheaper.

However, as technology has improved, the standard today is contactless smart cards that communicate wirelessly, without the need for a physical “swipe” between the card and the reader, and are based on near-field communication (NFC) technology in smartphones Finish. However, one key fact that Target was breached was rarely mentioned: the cards themselves were not the problem.

Table of Contents

Use NFC Chip Card to Improve Security

The NFC chip card is a contactless card that retains the components and security features of a smart card, but the electronic contacts of the former are replaced by a radio frequency portion similar to that used in RFID and eliminates physical contact with a POS reader . You don’t have to enter a PIN in every transaction, but when a certain amount is reached, the card reader will ask for a PIN to ensure security.

nfc chip card

The amount of each transaction is also limited. NFC chip cards were first used for electronic ticketing in Korea in 1995, and many Americans may remember ExxonMobil’s Speedpass system introduced in the late 1990s, which is still used at many ExxonMobil gas stations today. Since then, contactless technology has been adopted by MasterCard, Citibank, JPMorgan Chase, American Express, and many other organizations.

Use NFC Technology to Stop Hacking

NFC is a new way to enter the wireless “contactless” world. It is a set of communication protocols, data exchange formats and standards that allow mobile phones, tablets and laptops to share data with other NFC-enabled devices, similar to a contactless card, but without the card.

nfc technology

NFC was developed with the support of the NFC Forum created in 2004 by NXP, Sony and Nokia. It has been accepted by the GSMA and refines the architecture of the GSMA NFC standard for the operator wireless world. NFC allows two-way communication in a way that does not involve any wireless connections like Wi-Fi, 3G, LTE, etc.

NFC is derived from radio frequency identification (RFID) technology, so it also uses radio waves, but its communication distance is limited to about 10 centimeters. This is largely seen as a security advantage and could help increase the popularity of NFC. One of the most important uses of NFC is the secure payment of dynamic encryption such as Apple payment, Android payment and Samsung payment.

As technology and standards continue to evolve. Google has included its Host Card Emulation (HCE) in Android 4.4, but it doesn’t follow the GSMA standard. The first smartphones to include the PayPass or PayWave feature came out in 2011, and more have since added the feature. To advance the technology, in February this year, Mastercard announced a joint venture between EE, TelefAnica UK and Vodafone UK to make contactless payments a common platform in Europe.

NFC shares a fundamental approach with other contactless technologies, including RFID, in that it uses magnetic induction between loop antennas. When the antennas are close to each other, the antennas create a virtual transformer that produces a voltage. NFC operates in the unlicensed Industrial Scientific and Medical (ISM) frequency band at 13.56 MHz and has a theoretical working distance of 8 inches, but in practice it is only 2 inches or less.

With NFC technology, when another NFC-enabled device is within 10 cm of the current device, the connection can be established instantly. Once a contactless transaction begins, the NFC reader and device pass encrypted information back and forth, completing the transaction within seconds. In this way, not only simplicity is achieved, but also the transaction speed is much faster than traditional payment technology and data transmission technology.

Summary and Outlook

In the US, replacing magstripe cards with some form of contactless payment system makes a lot of sense. Smart cards, contactless cards and mobile phone-based NFC offer clear advantages in terms of security, which will reduce the incidence of theft.

However, the Target hack taught us that there is no silver bullet that will completely eliminate fraud, as long as the hackers go straight to the enterprise level with complete disregard for POS.

As contactless payment systems become more popular, hackers are sure to turn their attention to new avenues, as they already do on the web and on personal computers. Even so, consumers, banks, credit card companies and retailers stand to benefit once the cost of updating the system is amortized over time.

Newbega company is a professional NFC product manufacturer and solutions provider, smart card products sell well at home and abroad, if you have any demand, please click the button below to contact us.

Share to: