Contactless Smart Card - Problems

Problems

Another problem of smart cards may be the failure rate. The plastic card in which the chip is embedded is fairly flexible, and the larger the chip, the higher the probability of breaking. Smart cards are often carried in wallets or pockets — a fairly harsh environment for a chip. However, for large banking systems, the failure-management cost can be more than offset by the fraud reduction. A card enclosure may be used as an alternative to help prevent the smart card from failing.

Using a smart card for mass transit presents a risk for privacy, because such a system enables the mass transit operator (and the authorities) to track the movement of individuals. In Finland, the Data Protection Ombudsman prohibited the transport operator YTV from collecting such information, in spite of YTV's argument that the owner of the card has the right to get a list of journeys paid with the card. Prior to this, such information was used in the investigation of the Myyrmanni bombing.

Contactless technology does not necessarily prevent use of a PIN for authentication of the user, but it is common for low value transactions (bank credit or debit card purchase, or public transport fare payment) not to require a PIN. This may make such cards more likely to be stolen, or used fraudulently by the finder of someone else's lost card.