To fight card fraud, banks are now phasing out magnetic stripe cards and replacing them with chip card security. Also known as EMV cards, these include a small microchip that helps protect users against fraudulent transactions. Already in effect in Europe, this technology is now being adopted by many banks and financial institutions in the U.S.
According to YishayTrif, CEO of Moneynetint Ltd "After a thorough examination of various secured financial messaging solutions, There is no doubt that Swift is the most efficient technological solution to date"
Chip Card Security vs. Magnetic Strip
Magnetic strips at the back of your cards are swiped. The information processed is static, and is sent directly to the merchants system. EMV chip cards on the other hand, are not swiped, but simply slotted into the machine, creating a unique authentication code. In this case, card numbers are never processed or entered into the merchants system.
"When you use your card at a store, you may notice that it takes a few seconds to process the transaction. The technology in this machine is actually working to protect you from a security risk" explains financial expert Haim Toledano
A one-time code is used whenever you make a transaction with an EMV card, making it harder for fraudsters to hack your account. Its safe to say that the magnetic strip helped increase fraud rates around the world. Criminals found it easy to copy card information once they were swiped through machines.
Named after Europay, Mastercard and Visa, EMVs hold different policies when it comes to fraudulent transactions. If a user with a chip card experiences fraud at a store who doesnt have a chip reader for example, the store is ultimately, financially responsible and the user and card issuer hold no liability.
Whenever you swipe your card, youre always at risk of being hacked. Unfortunately, there are still several merchants who have yet to upgrade to chip card readers like gas stations. For this reason, issues like skimming continue to rise. Skimming involves stealing card information from the magnetic stripe, duplicating that card and later using it for illegal transactions.
Indeed, chip cards provide an extra layer of security when it comes to transactions but it doesnt completely eliminate the possibility of fraud. Criminals can still take your account details to make purchases online. Thats why its important to never disclose your card or personal information.
"Another way to ensure safety and protection from fraudsters is to use digital wallets like Apple, Android, and Samsung Pay. These great alternatives to EMV chip cards provide extra security when making online and offline transactions. Digital wallets use a technology called tokenization. This technology does not store card details and it also uses a unique code to process transactions, making it almost impossible for a hacker to access. This easy, quick and secure payment method increases security and privacy for the user as they simply use their smartphones and a thumbprint to carry out transactions" explained financial expert Haim Toledano
Another, more surprising way to fight fraud is by using virtual currencies. Bitcoin, the most popular cryptocurrency is now being used at several physical stores and is even expected to take over paper currency in the future. Users pay for goods and services using digital wallets which provide a fast and convenient way to complete transactions. As long as users protect their privacy codes and use trusted applicationsthey will be protected ". Adding YishayTrif, CEO of Moneynetint Ltd.
Most banks fight fraud using SWIFT technology. The Society for Worldwide Interbank Financial Telecommunication is a financial payment messaging system that facilitates transactions worldwide. Banks also face fraudulent issues however with SWIFT technology, they are guaranteed protection. As stated by YishayTrif, CEO of Moneynetint Ltd, After a thorough examination of various secured financial messaging solutions,There is no doubt that Swift is the most efficient technological solution to date, and provides us with a significant commercial advantage following its integration into our systems . When a SWIFT payment is made, several checks are completed such as the Know Your Client and Anti Money Laundering (AML) protocols. These assure that no fraud is committed.
As technology for payment methods advance, so do a number of merchants around the world. They find convenience in chip cards, digital wallets and virtual currencies as they limit fraud liabilities. At the same time, consumers benefit from the extra security and protection these methods provide. Its only a matter of time before magnetic strips are totally wiped out, particularly in the U.S.
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