Many of you may have received new credit cards recently which contain a small metallic square on the left front of the card. These are new EMV (Europay, Mastercard and Visa) cards which are being used to authenticate card transactions with computer chips and related technology. If you are like me, you didn’t even pay much attention when the new card came in the mail since your old one was expiring. When I went to swipe it at the store, the cashier had to show me how to insert the card into the bottom of the terminal.
The new technology is being implemented to improve payment security by making it harder for fraudsters to counterfeit cards. The magnetic strips on our previous cards contained unchanging data which if obtained by a fraudster could be easily replicated. The new chips create a new transaction code for each purchase which cannot be used again. A fraudster who tries to duplicate the transaction code will find him/herself being denied when they try to use the counterfeited card.
The use of the new EMV technology won’t eliminate data breaches but experts are hopeful it will significantly reduce them, at least from in store breaches. Online retailers will still be vulnerable as many fraudsters will switch focus from in person data breaches to online. Great Britain began using the chip technology in 2001. According to the UK Cards Association, online fraud rose 55%t between 2005 and 2008.
Small businesses may be most vulnerable due to limited resources to use sophisticated software to quickly determine whether or not a transaction is fraudulent. The software can analyze a number of factors in a transaction including matching shipping and billing addresses, whether the transaction is placed from an unfamiliar computer or whether the email provided is unfamiliar.
As always, remain vigilant in checking your personal credit card statements and credit history.
Melissa Loughlin-Sines, CPA, CFE, CVA, CFF, ABV