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Pay-by-wave: At least it's better than being mugged

Takes 400ms to nick £15, but you'll get it back quick

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Analysis The public thinks that paying with a tap of the phone is risky, with criminals able to intercept and steal credentials, so it seems a good time to take a closer look at proximity payments.

Orange Quick Tap is already deployed in the UK; we used one to buy cookies in Inverness and they were delicious. In the US Google Wallet is already on the streets and can host a pair of payment schemes within its secure element.

But in order to understand how secure proximity payments really are, we chatted to Orange, Barclaycard and security biz Gemalto to gauge how confident they are that no one is going to pick pockets by radio.

Millions of UK credit cards already have pay-by-wave payment technology built in, and hundreds of thousands of retailers accept these proximity payments, but Gemalto (which makes the secure elements in SIM chips) found that only a third of the population knows what near-field communication (NFC) is. More than a third reckon they'd never pay by tap because they believe it will never be secure. Which is a shame, because it's at least as secure as the alternatives, and it will come whether the public wants it or not.

How does it work?

Today's proximity payment systems are based on the NFC standard, which uses a radio connection at 13.56MHz for short-range peer-to-peer communications. The same frequency is used by RFID tags, in a simplistic way, but NFC is a good deal more complicated, and expensive.

RFID tags are powered by the received radio signal, so various groups have demonstrated that by upping the radio signal strength they can read the tags at a considerable distance - 80 miles if some are to be believed. But NFC devices are a lot more complicated, and (critically) draw power from a wireless induction loop in the reader, not from the radio signal.

That's important, because a radio signal can easily be amplified to increase the range, but running induction power over a distance of more than a few inches requires huge amounts of energy and an enormous loop. So anyone planning to interact with your NFC card, or phone, from more than a meter will probably have your hair standing on end and coins heating in your pocket.

Not that most would bother: snuggling up close is easy enough on public transport so getting within 10cm of your phone, or credit card, should't be a problem.

But it's not just a matter of getting close. The NFC component won't communicate with just anyone, our miscreant needs to get hold of a legitimate reader - perhaps by registering as a merchant under a suitably false identity. That registration will provide a bank account for our thief to stash his ill-gotten gains, temporarily, though it also exposes our crook to considerable attention which will make it easier to track him down later.

Soft readers, which are smartphone apps that can operate as an electronic till, will come along soon enough, making it easier for our thief to nick cash. But even then the bank will only transfer money into a named account, so our swindler will have to have that set up and register it with the payment scheme.

But assuming creative use of a false moustaches and forged identity documents our man now has his fake merchant account and is right next to you, with a reader communicating direct to your pocket. Transactions are supposed to complete within 400ms so he won't have to stand close for long. But far from just reading the NFC tag the process is comprised of a number of cryptographic steps which further complicate things for our chap.

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