By Erin Pentelechuk
Sun Media Tuesday August 12, 2008
The latest technology created to protect against credit card and debit fraud is now being tested.
The chip card, which is being adopted by companies across Canada, has a microchip and is encrypted to make the information virtually impossible to copy.
According to Cpl. Terry Schmidt of the Edmonton RCMP Commercial Crime Unit, although the transition to chip cards might be a bit rocky, the card itself is a great thing.
“Essentially, it’s a computer on a card. The power supply is provided externally, but it has memory on it,” Schmidt said.
The card looks exactly like a normal card, except it will have microchip as well as the magnetic stripe, and users will punch in a pin instead of a signature for credit card transactions.
“Now there will be a pin associated with the card, which is your electronic signature and the pin will be changing in such a way that it can’t be cracked. It’s really quite effective,” Schmidt said.
Oliver Manahan, vice-president of advanced payments with MasterCard Canada said the switch is a move the company is excited about, as the card has proven to be a very positive technology.
“While we have the lowest fraud levels worldwide, we want to prevent future fraud initiatives from coming,” Manahan said.
“By making this move now, we’re protected going forward.”
Tina Romano, spokesperson for Interac, said the move should lower instances of debit fraud. Interac has set a 2012 date for the transition of ABMs and 2015 for point-of-sale machines.
Both MasterCard and Interac will be keeping the magnetic strip to allow for cases where the chip can’t be used.
Schmidt said this is largely due due to the U.S. not switching anytime soon.
“We’re still going to have to deal with where we have to be able to read magnetic stripe cards, but also adapt to chip cards,” he said.
“But it may displace criminal activity down to the states where things are totally magnetic stripe.”
He said it’s impossible to completely eliminate fraud crimes, but with an extra layer of protection, it’s likely that criminals will be more likely to go for the easy-to-copy magnetic stripe cards rather than fool around with the encryption on the chip cards.
Schmidt said debit and credit card users will likely start to see the new cards as early as 2010, depending on how quickly financial institutions change over.
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