Countries with Established EMV Chip Use Experience Fraud Reduction

When the UK Card Association released its latest fraud statistics, a significant drop in overall fraud was reported for the second year in a row, making losses through fraud drop to its lowest point in almost 10 years.  This decline has been driven by a combination of new technologies such as chip and PIN and increased consumer awareness. Overseas card skimming was long seen as a growth area for card fraud, but the introduction of EMV in tourist and other markets has helped bring this figure down.

Countries with established EMV chip use appear to continue to experience a reduction in incidents, reports Douglas Russell of DFR Risk Management, a world expert in ATM fraud and security threats. This sustained decline has been strongly advanced by the prevalence of new technologies such as EMV chip and PIN security, enhanced Internet banking security protocols, two key factor authorizations, and online features such as 3-D Secure that adds an authentication step for online payments.

3-D Secure was designed to be an additional security layer for online credit and debit card transactions. It was developed by Visa with the intention of improving the security of Internet payments and offered to customers as the Verified by Visa service. This technology was also adopted by MasterCard under the name MasterCard SecureCode and by JCB International as J/Secure. American Express added SafeKey to UK and Singapore. It’s important to keep in mind that technology is only as good as its users.

A major factor impacting on the decline in fraud is the greater awareness and caution shown by consumers about the methods used by fraudsters. Datamonitor, an international company providing market intelligence, released their Financial Services Consumer Insight Survey 2010 which revealed concern among consumers about the possibility of their card details being stolen.

Of consumers surveyed, 62.6% of consumers expressed significant or very significant concern about card details being stolen on the Internet, 59.1% at an ATM and 57.1% in a shop or restaurant. Other key findings of further concerns showed 56.7% of consumers worry about their online or telephone banking details being stolen, 51.2% are concerned about their identity being stolen and used to apply for a loan or mortgage, and 44.7% fear being tricked into giving their details to a fraudster.

Skimming at an ATM occurs when a thief has installed a small, almost unnoticeable “skimmer” to the machine that can read the magnetic stripe on a card. It can even be set up to grab and capture your card, holding onto it instead of just reading it, so that when you walk away to report the problem, a thief can simply step up and take it.  Skimming is not a problem restricted to ATMs because criminals can rig any device meant to read a card with a magnetic stripe. Gas stations, grocery stores, and restaurants are also targets. With so many tricks out there, you need to be vigilant to stay a step ahead of the bad guys. First and most importantly — pay attention to your statements and check your account every two weeks. If anything looks suspicious about an ATM, don’t use it. Also, cover the PIN pad with your hand while entering your number to block any cameras that could capture a PIN.

The persistent decline in UK card fraud implies that consumer education and new technologies are working. Merchants and consumers must never let down their guard because new threats are likely to emerge over the coming years, particularly if carelessness grows.When the UK Card Association released its latest fraud statistics, a significant drop in overall fraud was reported for the second year in a row, making losses through fraud drop to its lowest point in almost 10 years.  This decline has been driven by a combination of new technologies such as chip and PIN and increased consumer awareness. Overseas card skimming was long seen as a growth area for card fraud, but the introduction of EMV in tourist and other markets has helped bring this figure down.

Countries with established EMV chip use appear to continue to experience a reduction in incidents, reports Douglas Russell of DFR Risk Management, a world expert in ATM fraud and security threats. This sustained decline has been strongly advanced by the prevalence of new technologies such as EMV chip and PIN security, enhanced Internet banking security protocols, two key factor authorizations, and online features such as 3-D Secure that adds an authentication step for online payments.

3-D Secure was designed to be an additional security layer for online credit and debit card transactions. It was developed by Visa with the intention of improving the security of Internet payments and offered to customers as the Verified by Visa service. This technology was also adopted by MasterCard under the name MasterCard SecureCode and by JCB International as J/Secure. American Express added SafeKey to UK and Singapore. It’s important to keep in mind that technology is only as good as its users.

A major factor impacting on the decline in fraud is the greater awareness and caution shown by consumers about the methods used by fraudsters. Datamonitor, an international company providing market intelligence, released their Financial Services Consumer Insight Survey 2010 which revealed concern among consumers about the possibility of their card details being stolen.

Of consumers surveyed, 62.6% of consumers expressed significant or very significant concern about card details being stolen on the Internet, 59.1% at an ATM and 57.1% in a shop or restaurant. Other key findings of further concerns showed 56.7% of consumers worry about their online or telephone banking details being stolen, 51.2% are concerned about their identity being stolen and used to apply for a loan or mortgage, and 44.7% fear being tricked into giving their details to a fraudster.

Skimming at an ATM occurs when a thief has installed a small, almost unnoticeable “skimmer” to the machine that can read the magnetic stripe on a card. It can even be set up to grab and capture your card, holding onto it instead of just reading it, so that when you walk away to report the problem, a thief can simply step up and take it.  Skimming is not a problem restricted to ATMs because criminals can rig any device meant to read a card with a magnetic stripe. Gas stations, grocery stores, and restaurants are also targets. With so many tricks out there, you need to be vigilant to stay a step ahead of the bad guys. First and most importantly — pay attention to your statements and check your account every two weeks. If anything looks suspicious about an ATM, don’t use it. Also, cover the PIN pad with your hand while entering your number to block any cameras that could capture a PIN.

The persistent decline in UK card fraud implies that consumer education and new technologies are working. Merchants and consumers must never let down their guard because new threats are likely to emerge over the coming years, particularly if carelessness or apathy grows.