Visa's new Paywave chip-and-PIN credit-cards have a $1M limit on foreign-currency transactions that can be verified "in-card," meaning that someone who gets close enough to your UK wallet can simply wave a phone at it and charge a megabuck to it without raising any realtime security alerts.
More practically, fraudsters with access to a crooked overseas bank could charge smaller amounts that might go undetected for weeks or months, and that would be low enough that police departments would be likely to ignore them.
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."
Flaw in New 'Secure' Credit Cards Would Let Hackers Steal $1M Per Card [Kim Zetter/Wired]