Thursday, July 03, 2003

Chip and PIN: not enough to beat card fraud

Conversion to EMV-chipcards will not solve all fraud, The Register/Datamonitorreports:

Detective Chief Inspector Steve Eastwood, operational head of the dedicated check and plastic crime unit, has warned the outcome of the introduction of chip and PIN could be a shift in fraudsters' attentions to other, more vulnerable areas. In the payment space these are likely to be telephone, Internet and mail order transactions. Card not present (CNP) fraud, the collective name for fraud via these channels, amounted to GBP110 million in 2002, up by 15% on 2001.

We may therefore conclude that imposing a liability shift on POS-merchants that do not have an EMV-compliant terminal cannot be fully justified as a means to combat fraud. The Card-not-present transactions really generate the fraud, not so much the magstripe at a manned Point of Sale.