According to researchers at Newcastle University in the UK, the card system developed by VISA for use in the United Kingdom fails to recognize transactions made in non-UK foreign currencies and can therefore be tricked into approving any transaction up to 999,999.99.
What’s more, because the cards allow for contactless transactions, wherein consumers need only to have the card in the vicinity of a reader without swiping it, a thief carrying a card reader designed to read a card that’s stored in a wallet or purse could conduct fraudulent transactions without the victim ever removing their card.
Since the transaction is done offline without going through a retailer’s point-of-sale system, no other security checks are done.
“With just a mobile phone we created a POS terminal that could read a card through a wallet,” Martin Emms, lead researcher of the project that uncovered the flaw, noted in a statement about the findings. “All the checks are carried out on the card rather than the terminal so at the point of transaction, there is nothing to raise suspicions. By pre-setting the amount you want to transfer, you can bump your mobile against someone’s pocket or swipe your phone over a wallet left on a table and approve a transaction.”
In tests the researchers conducted, transactions took less than a second to be approved. In the UK, contactless payments are limited to a maximum value of £20, requiring a PIN for anything more than this. But the researchers found that the system doesn’t recognize foreign currency transactions and therefore doesn’t require a PIN for these.
“This lends itself to multiple attackers across the world collecting small transactions of perhaps €200 at a time for a central rogue merchant who could be located anywhere in the world,” Emms notes. “This previously undocumented flaw around foreign currency, combined with the lack of POS terminal authentication and the ease of skimming contactless credit cards, makes the system more vulnerable to high-value attacks.
It is not clear from reading the payment protocol how banks would deal with the inconsistencies we have found through our research, hence we believe the vulnerability poses a potential threat,” he said. “The fact that we can by-pass the £20 limit makes this new hack potentially very scalable and lucrative. All a criminal would need to do is set up somewhere like an airport or the London underground where the use of different currencies would appear legitimate.”