Paying with credit card has always been a widespread, although still insecure payment method. It’s hard to say how many people have suffered from different kinds of frauds so far.
To consider the problem in details let’s see how a credit card is designed. It contains a plastic chip on the left side which can be read by processing terminals thus making transactions universal. All the personal information is kept on a magnetic stripe on the back of the card. It is this data that is prone to card skimming.
Randy Vanderhoof, executive director at the Smart Card Alliance, explains: “Everything a fraudster would need to make a duplicate was available by copying the stripe itself or stealing data from the merchant data system.”
Replacing a personal signature with input of PIN code known only to card owner while transacting has somehow protected customers from counterfeit. Thus stolen or lost credit card blocked by the bank is useless for criminals. The problem of copying personal information still remained.
Many banks all over the world switched to EMV-chipped credit cards for safety. The main difference which is crucial for data security is storage of personal information on EMV chips instead of card stripes.
It’s necessary to gain an understanding of EMV technology first of all to appreciate new types of credit cards. To put it short, EMV is a technical standard both for debit cards as well as for terminals and machines accepting these cards. As we have already mentioned, such cards keep sensitive information on integrated circuits, not on magnetic stripes. EMV stands for Europay, MasterCard, and Visa, the three companies which originally created the standard.
The possibility of making a duplicate of EMV-chipped card is minimized. Fraudsters need special tools to create a copy of EMV chip. Owen Wild, security marketing director at NCR, gives a promising statistics: “We have not seen a proven data breach of a chip card in an EMV market since it’s been in place”. Inspiring, isn’t it? The formula chip+PIN provides the highest level of security available so far.
It’s interesting that chip-enabled cards have been in use for more than 20 years so the time has definitely come for people to pay proper attention to them and to provide better security for their funds. Vanderhoof underlines that extra security is added by means of microprocessor every single time you want to pay for something with your card.
Bear in mind that check-out process with EMV cards will take slightly more time. While typical transaction is processed in 3-5 seconds, here it can take 5-10 seconds. Under closer examination it’s a trifle which can be easily put up with in favor of security.
For those who are open to innovations, many banks tend to seriously consider blockchian and bitcoin as alternative payment method.
The globe’s leading banks, including JP Morgan, Goldman Sachs and Barclays, may integrate the blockchain in the near future, as they have already started testing the system.
They state a low risk of fraud and high level of transparency as the key benefits of using the technology behind bitcoin. The banks have entered into a partnership with New York-based financial innovation firm, called R3CEV, to help it develop the same technologies that underpin the blockchain in order to broaden its usage among financial institutions.
Bank of America has recently applied for a patent with the United States Patent and Trademark Office for a technology of global transfers using bitcoin. According to the patent, published on September 17, the system will enable utilizing digital currencies, including litecoin, dogecoin, peercoin and ripple, for sending funds across countries.