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Visa says chip-enabled credit and debit cards have reduced counterfeit charges by nearly 20 percent

By Shawn Knight
Apr 21, 2016
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  1. Visa, the world’s largest payments processor, has confirmed that chip-enabled cards flooding the US market are indeed effective at curbing fraud.

    Stephanie Ericksen, vice president of risk products at Visa, recently told USA Today that five of the 25 merchants that suffered the most instances of counterfeit fraud at the end of 2014 realized an 18.3 percent drop in fraudulent transactions just one year after adding the ability to process chip-enabled credit and debit cards.

    Visa said it has issued roughly 265 million chip-enabled cards to date that can be used at over a million merchants across the country. That’s only about 20 percent of merchant locations, however, highlighting the fact that the overwhelming majority of merchants don’t yet support cards with EMV technology.

    Rival MasterCard told the publication that 70 percent of its consumer credit cards are now chipped.

    Adoption aside, another hurdle that Visa is tackling is the amount of time it takes to process a transaction. With its new software update, the payments processor says cardholders can insert and remove a chip card within two seconds or less rather than having to leave the card in the terminal until the transaction is authorized.

    Ericksen said that the overall transaction may only be a few seconds faster but being able to remove a card from a terminal quickly gives shoppers the impression that the transaction is much faster.

    Permalink to story.

     
  2. trparky

    trparky TS Booster Posts: 156   +58

    But most stores where I live don't accept the chip cards or contactless payment for that matter.
     
    Uncle Al likes this.
  3. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,754   +1,107

    How and why do chipped cards reduce counterfeit charges? I'm not doubting that they do, I'm really curious as to how it works and what the difference is between sliding it down the side of the reader or sticking it in the bottom. Seems pretty similar to me.
     
  4. Captain Five

    Captain Five TS Rookie

    The article is about Visa, yet you use a picture of a MasterCard. LOL
     
  5. psycros

    psycros TS Evangelist Posts: 1,324   +711

    The only real difference, from what I understand, is that there's an extra level of info stored on the chip. Its very easy to copy magnetic strips and almost as easy to hack/clone RFIDs. That chip insures that counterfeit digitally-enabled cards will only be used by elite hackers such as those employed by the wealthiest nations or large criminal organizations...at least for now. Those chips can be read from several feet away just as RFIDs can. Its only a matter of time before their cracked, but one can only hope the credit industry can update a card's security at the point of sale. If not then they'll be sending out replacement cards a couple times a year, which would be incredibly dumb.
     
    MilwaukeeMike and cliffordcooley like this.
  6. Uncle Al

    Uncle Al TS Evangelist Posts: 1,682   +787

    Only a 20% decrease? Apparently they have seriously backed off their earlier claims that these new chip cards would "virtually eliminate any counterfeiting" thus again proving the old saying, if you can build it somebody can figure out how to break it.
     
  7. MilwaukeeMike

    MilwaukeeMike TS Evangelist Posts: 2,754   +1,107

    Well, you can't eliminate fraud that doesn't occur at a point of sale. Chips don't matter if you're ordering online, or if the store doesn't have a chip reader. What would be cool to know is how much money is this. 18 % fewer fraudulent transactions is probably millions of dollars.
     
  8. mbrowne5061

    mbrowne5061 TS Evangelist Posts: 340   +133

    These chips, the ones that require the card to inserted into the terminal like an old Sega cartridge, actually scramble themselves with each transaction. There is no 'one number' to steal or skim, like there is with magnetic strips. Basically, you insert the card, the number is read and transmitted to Visa/MC, they verify that it is the correct values for the account in question, a new number is generated and transmitted back to the terminal, this new number gets written onto the chip (overwritting the old one). So even if you are the victim of a man-in-the-middle attack - skimming, someone intercepting the data, etc - they only get a number that is good for one use, and that assumes they beat you to using it (and that they can actually figure how to use it at a physical location).
    This method does nothing to stop someone from copying/memorizing your physical card number, so internet and telephone fraud is still possible.


    Not in this case, these chips require physical contact with the reader. See how the surface is segmented in the photo? Each of those surfaces is an individual I/O contact for the chip. Now, some 'chipped' cards have RFID chips in them as well. These can be read, and these RFID chips do not have the same 'change their number after each transaction' feature that the new 'chips' do.
     

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