The end of credit card fraud?

Bruce Whitfield:
Nick Essame is Visa sub-saharan head of new technologies. What that means is he is the man who makes credit cards look a lot more interesting and work in a lot more interesting ways.

These credit cards Nick, lets face it, as they are, at the moment are hugely vulnerable to fraud.

Nick Essame:
Bruce, good evening. Yes you are absolutely right. The magnetic stripe technology on the back, the black strip is a good 20 to 25 years old.

I think every fraudster in creation knows what’s on and how to skim it. You can pick up skims on the internet for about $5 or $6. I mean, it’s well past time, I think that the technology moved on and started to protect the cardholders.

Bruce Whitfield:
And the technology itself. Now you’re talking about something called EMV, which is the acronym for Europé Mastercard Visa. Three companies which have come together to develop a microchip effectively, which is embedded in the card.

Nick Essame:
Well, EMV is actually the standards that everybody has to comply to. We have seen a number of proprietary schemes, which are great up to a point, but you try to get the entire globe operating off one standard. We had to collaborate with Mastercard and Europé and in fact, there is a company, not for profit company set up that is custodian of these standards.

Bruce Whitfield:
Now what is going to be the difference to me as a consumer, user of credits cards or debit cards when I get this new card with a microchip in it?

Nick Essame:
The real difference is that because the chip is a computer in its own right. There is a decision making process which takes place between the terminal and the chip which decides how the cardholder is going to be validated.

Is he going to be validated by putting his pin in, is he still going to have to sign. In future we will see biometrics going into that particular space.

Bruce Whitfield:
Biometrics, in other words, eyeball recognition, or thumb prints or whatever the case may be.

Nick Essame:
All those good scary things that you see and things like that. He will have an experience, and a lot of people travelling to Europe now are starting to run into the chip and pin scenario, where with a credit card, you will be asked to put your pin in and what you are doing effectively in the card presence space, we are not talking about the internet and that sort of thing, is you are now introducing a card that cannot be skimmed, that cannot be counterfeit. I say cannot, that is a little bit rash of me.

Bruce Whitfield:
A friend of mine raised an interesting point the other day, he said, all you’ve got to do, and he was not being literal I don’t think, is take a brick smash the microchip and then it would revert to the magnetic strip on the back. So you could theoretically disable the microchip and go to a retailer and say, terrible sorry, the microchip is not working, just skim it for me and I’ll sign.

Nick Essame:
I think a brick is a slight overkill, but yes, you certainly can damage the chip. The thing is though; the issue is not exactly which cardholder should have a chip.

They will investigate why the chip is damaged and what is happening. In some of the same ways, that you can have a number of attempts in getting books out of Amazon, and after about two or three, they start to get a little suspicious.

So, yes, it can happen in that respect, and the way it has been structured and centred, is that the banks liability in that particular instance changes. No, it does not stop somebody, I think the commonest is to use a nail or something like that to damage the chip and the banks will have to follow through on that. But leaving that aside, the likelihood of having our card skimmed, I hate to mention it, but mine was skimmed not so long ago in Mauritius, decreases to almost nothing.

Bruce Whitfield:
And that’s what the point is. This is a new level of security, it is not “B” all and end all, it is not going to make these things completely fraud proof, but it does make your life as a credit card user that much safer.

Nick Essame:
It does, it also provides a platform to move forward, because the chip has more that just a fraud capability, as you can multiple applications onto it. We are starting fairly gently with payment applications, but certainly there will be loyalty applications, there will be history applications, medical applications, and all sorts of applications that can be added to the chip.

Bruce Whitfield:
Nick Essame, we must leave it there. Thank you very much indeed.

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