Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Endpoint

10/8/2015
10:30 AM
Deborah Baxley
Deborah Baxley
Commentary
Connect Directly
Twitter
LinkedIn
RSS
E-Mail vvv
50%
50%

Chipping Away At Credit Card Fraud With EMV

As of October 1, so-called chip-and-pin technology is now the law of the land for electronic payments in the US. But it's not the silver bullet that will instantly stop all cybercrime.

America is the last country in the world to implement EMV, according to the card industry standards group EMVCo. But it is finally here. 

What took so long?  Part of the answer is that US banks were already doing a good job monitoring and catching fraud using data analytics to detect suspicious patterns, which made the expense of shifting to new technology hard to justify. Unfortunately, as one region after another implemented EMV, the US became a haven for credit card fraud, accounting for nearly 50 percent of global fraud losses, according to the Nilson Report.

EMV’s main target is to eliminate in-person counterfeit fraud. In contrast to magnetic stripe cards that can be quickly and easily manufactured in the thousands by criminals using stolen card numbers, chip cards are virtually impossible to clone or counterfeit. If an EMV card is counterfeited to look like a magnetic stripe card, it would be rejected by an EMV-enabled point-of-sale terminal because the system recognizes that the card should have a chip and doesn’t. If the user is not able to insert the chip portion into the reader the incident of fraud is thwarted. 

That’s a definite improvement. But, sadly, EMV is not a silver bullet that will instantly stop all fraud.  EMV still cannot address e-commerce or mobile commerce “Card-Not-Present” (CNP) fraud.  In other countries credit card fraud migrated to the CNP channel after EMV was introduced.  Equally disheartening is the fact that, according to Strawhecker Group,  in the US, merchants and ATM owners will remain fraud targets because it will be a number of years before we reach significant adoption of EMV.

In the meantime, one strategy the retail and banking industry can use to protect itself against relentless and mutating fraud attacks should include a layered approach to security, involving:

  • End-to-end encryption, in which all data transmitted from the point-of-sale until it reaches the firewall of the secure bank environment.
  • Tokenization, a technique that devalues card numbers. The card’s actual account number is swapped with a surrogate value which has little to no value if compromised.  Apple Pay is an example of this technique; the card number stored in the phone is actually a token.
  • Security best practices such as Payment Card Industry Data Security Standard (PCI DSS).  A hallmark of the standard is that no real account data should be stored in the clear.
  • Authentication techniques, including device authentication and fingerprinting, one-time passwords, randomized PIN pad to thwart key logging, and biometrics.
  • Fraud detection, including data analytics, address verification and Card Verification Value (CVV) verification.

Shifting liability 
Whille the recent October 1 deadline for fraud liability represents the beginning of an evolution, it's imperative that all industry stakeholders maintain a vigilant eye on fraud patterns.  

What does the liability shift mean? In the past, banks paid for counterfeit credit and debit card fraud losses, provided the merchant properly authorized the transaction. Starting in October, if a counterfeit transaction goes through at a merchant that does not have EMV equipment, the bank passes the loss to the merchant. Some merchants -- and especially ATMs -- are prime targets for counterfeit activity: think jewelry, electronics, gift cards, liquor, gambling and gasoline. (Because of the additional complexity, gas pumps have a two-year grace period before having to upgrade equipment.)

Each enterprise and merchant will make their own decisions on when to upgrade.  Keep in mind though, there are other benefits to shifting to EMV.  Along with EMV enablement, nearly all modern point-of-sale equipment supports mobile and contactless payments.  In effect, upgrading to EMV will also bring merchants into the world of modern payments, because they will be able to accept Apple Pay, Samsung Pay and Android Pay from consumers’ phones and watches.

Deborah Baxley is an international retail payments consultant, recognized expert in the industry, creator of growth strategies for new and existing markets and 30-year IBM veteran with more than 15 years experience consulting to cards and payment companies. Baxley is a ... View Full Bio
 

Recommended Reading:

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
HAnatomi
50%
50%
HAnatomi,
User Rank: Apprentice
10/8/2015 | 11:48:22 PM
Biometrics?
Bringing biometrics in the scheme could end up with pleasing criminals.

Whether face, iris, fingerprint, typing, gesture, heartbeat or brainwave, biometric authentication could be a candidate for displacing the password if/when (only if/when) it has stopped depending on a password to be registered in case of false rejection while keeping the near-zero false acceptance.

 Threats that can be thwarted by biometric products operated together with fallback/backup passwords can be thwarted more securely by passwords alone. We could be certain that biometrics would help for better security only when it is operated together with another factor by AND/Conjunction (we need to go through both of the two), not when operated with another factor by OR/Disjunction (we need only to go through either one of the two) as in the cases of Touch ID and many other biometric products on the market that require a backup/fallback password, which only increase the convenience by bringing down the security.

 
COVID-19: Latest Security News & Commentary
Dark Reading Staff 11/19/2020
New Proposed DNS Security Features Released
Kelly Jackson Higgins, Executive Editor at Dark Reading,  11/19/2020
How to Identify Cobalt Strike on Your Network
Zohar Buber, Security Analyst,  11/18/2020
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Write a Caption, Win an Amazon Gift Card! Click Here
Latest Comment: This comment is waiting for review by our moderators.
Current Issue
2021 Top Enterprise IT Trends
We've identified the key trends that are poised to impact the IT landscape in 2021. Find out why they're important and how they will affect you today!
Flash Poll
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2020-25159
PUBLISHED: 2020-11-24
499ES EtherNet/IP (ENIP) Adaptor Source Code is vulnerable to a stack-based buffer overflow, which may allow an attacker to send a specially crafted packet that may result in a denial-of-service condition or code execution.
CVE-2020-25654
PUBLISHED: 2020-11-24
An ACL bypass flaw was found in pacemaker before 1.1.24-rc1 and 2.0.5-rc2. An attacker having a local account on the cluster and in the haclient group could use IPC communication with various daemons directly to perform certain tasks that they would be prevented by ACLs from doing if they went throu...
CVE-2020-28329
PUBLISHED: 2020-11-24
Barco wePresent WiPG-1600W firmware includes a hardcoded API account and password that is discoverable by inspecting the firmware image. A malicious actor could use this password to access authenticated, administrative functions in the API. Affected Version(s): 2.5.1.8, 2.5.0.25, 2.5.0.24, 2.4.1.19.
CVE-2020-29053
PUBLISHED: 2020-11-24
HRSALE 2.0.0 allows XSS via the admin/project/projects_calendar set_date parameter.
CVE-2020-25640
PUBLISHED: 2020-11-24
A flaw was discovered in WildFly before 21.0.0.Final where, Resource adapter logs plain text JMS password at warning level on connection error, inserting sensitive information in the log file.