The Surge In Credit Card Chips Couldn’t Come At A Better Time

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Robert Donachie Capitol Hill and Health Care Reporter

In a financial world living in constant fear of cyber security breaches, banks are focusing security efforts on one key feature: EMV credit card chips.

The global standard for these chips is EMV, which stands for Europay, Mastercard and Visa. Cards come equipped with computer chips used to authenticate consumer transactions. Bank customers can easily spot these computer chips on their cards, as they appear on the surface as a small, shiny metallic square.

Standard credit cards come equipped with a magnetic strip which contains unchanged user data, meaning the same line of information specific to that one user is recognized every time the card is used. EMV cards, however, produce a one-time transaction code unique to each individual transaction. Thus, if a thief stole the user information at one point of sale, the information is rendered useless the next time the card is used.

Large credit institutions like Mastercard, Visa, American Express, and Discover announced their change to EMV cards on October 1, 2015, and one year later millions of U.S. businesses have already upgraded to credit and debit card machines with EMV and smart card technology.

Arguably the most interesting advancement isn’t occurring at the check-out counter, but at the automated teller machine (ATM).

The number of consumers compromised at ATMs rose more than sixfold since 2014, and the frequency between attacks fell from 36 days in 2014 to 14 days in 2015, according to a study by Fair, Isaac and Company (FICO).

Credit card companies are putting pressure on ATM providers to ensure that their devices are secure. Mastercard announced that, as of Oct. 21, ATM providers will be liable for any and all fraud-related costs incurred by a consumer if a Mastercard is used at a machine that is not equipped with security chip technology, the Journal reports. Visa is expected to join Mastercard in this push by next year.

Consumers are becoming more susceptible to fraud as cyber thieves develop more advanced ways to steal personal financial information. Skimming is the most well-known thievery mechanism. It occurs when a cyber-criminal implants a device into an ATM or card reader that will read all the account information stored electronically on the magnetic strip. In more sophisticated skimming devices, the thief can even pick up an individual’s personal identification number (PIN).

Skimming occurs most frequently at non-bank ATMs, at a rate of 60 percent of all reported instances, FICO analysis shows. Cyber-criminals make around 1.5 million ATM cash withdrawals annually, the Journal reports.

The cost of upgrading an ATM with smart-chip technology runs in the ball park of $300-700, a sizable cost but arguably equal to the liability an owner could face against one, or more, possible credit card thefts.

Banks initially focused on credit cards with chip technology, but now banks claim that debit cards are an equally important endeavor. At the outset of the smart-chip, just 23 percent of new debit cards contained them. That figure is drastically lower than that of U.S. consumer credit cards, with 88 percent of them having computer chip technology.

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