Making purchases with the quick wave of a cell phone or a plastic card–rather than a swipe–in front of a reader or scanner is becoming a reality as issuers and merchants begin to show support for contactless payments.

For several years, this type of payment was considered a gas station convenience, thanks primarily to ExxonMobil Speedpass. Now some credit unions and other issuers have begun putting credit/debit cards and key-fob tokens with radio frequency-based contactless payment chips into the hands of millions of consumers. Major card companies–including American Express, MasterCard, and Visa–also have launched initiatives to offer contactless payment devices.

While embracing technological advances seems to be the right thing to do, it is also prudent to identify the associated risks and identify and implement loss control best practices. According to Aberdeen Group (December 2006), 74% of retailers that have deployed or are considering deploying wireless retail devices do not view security as a top risk factor. Unfortunately, with data breaches at a record high in 2007, this seems very puzzling. Haven't we learned from the past? Credit unions should be careful not to fall into this trap.