The UK experience is indicative of how criminals will remain one step ahead.
Chip and pin helped cut card fraud by 13% to £439m last year from a 2004 high of £504m. Now, however, so-called ‘card not present’ fraud, which consists mainly of Internet scams, has risen 21% to £183m.
Source: Online shoppers may get own card terminals to beat fraud – Sunday Times – Times Online
Current implementations of chip won’t work as long as they combine mag strip and chip on the same card. The current implementations are intended to deal with fraud, but designed to deal only with ‘stolen credentials’ fraud.
“Chip and pin was brought in to deal with counterfeit and lost and stolen card fraud, it wasn’t introduced to tackle card-not-present fraud. What the industry is doing now is looking at ways to utilise chip and pin technology in an online environment,” said a spokesman for Apacs.
Relevance to Bankwatch:
I remain convinced the Bank that goes with chip only cards, and no mag stripe on those cards,will be the winner. If customers require temporary cards for foreign use, then issue them separately, and charge for them.
tags: chip+cards, mag+stripe
Bankwatch 
I agree strongly. I was surprised that a new chip and PIN card I received just two weeks ago had both a stripe and embossing on it.
I would have thought it was more logical to treat stripes and embossing as special cases so that customers who want to use their cards in Botswana or the USA can order them specially.
Bingo … thats it right there Dave. btw, I believe Botswana is beautiful this time of year.
PS .. one problem lies in the length of time that is being taken to move merchants from mag stripe to chip. I think 100% fraud responsbility on the merchants would speed up that migration, and I see no other way to get that done.
thoughts?
“I think 100% fraud responsbility on the merchants”
Actually, the way it is done here is that the fraud liability rests with whoever was the weakest link, if you see what I mean. If the merchant can accept chip cards, but the acquirer can’t, for example, then it’s not the merchant’s liability.
I would very much like a “chip only” debit card, so that it could not be counterfeited and used in foreign merchants or ATMs, which is where a lot of the fraud is coming from at the moment.
re “weakest link” .. that makes perfect sense. The weakest link in the chain would not necessarily be the merchants. In Canada about 60% of the ATM’s are white lable, i.e. non bank, and those acquirers migration path to chip is not yet clear.