“We are working on implementing it in the U.S. It’s time for chip-and-PIN in the U.S.,” said Jamie Henry, Wal-Mart director of payment services, according to online publication StorefrontBacktalk.  

Payment cards in the United States are based on simpler magnetic stripe technology, not smartcard-based chip-and-PIN, which are deployed more throughout Europe and elsewhere, most with the EMV standard, which Wal-Mart supports outside the United States. Many make the argument that smartcard-based chip-and-PIN payment cards are more secure than magnetic stripe for a variety of reasons, including that it’s fairly easy for fraudsters to clone magnetic stripes.

Wal-Mart was not immediately available to comment.

The debate over credit card data security has heated up over the past year, in the wake of the infamous Heartland Payment Systems breach that resulted information affecting more than 100 million credit cards being stolen. Network World recently hosted an online debate on this issue.

Read the full article on Network World here.

The cost of credit and debit card fraud dropped by 23 per cent to £232.8million during the six months to the end of June compared with the same period in 2008. Industry body Financial Fraud Action attributed the fall in fraud on UK-issued cards to the success of chip and pin, as well as systems to make it harder to use stolen cards over the internet.

They added the dip may also have been caused by fraudsters targeting cards issued in countries that do not yet have the chip and pin system in place.

The group said fraud losses on foreign-issued cards used in the UK had jumped by 36 per cent during the first half of the year to £81.1 million.

Fraud losses on cards used at UK retailers fell by 26 per cent during the six months, while fraud on cards lost in the post was down by 33 per cent.

Losses on lost and stolen cards dropped by six per cent - to the lowest level since the industry began collecting figures in 1991.

Innovations such as Verified by Visa and MasterCard SecureCode, under which the cardholder has to enter a password or code when buying online, contributed to losses on phone, internet and mail order fraud recording their first decline - of 18 per cent to £134million.

Katy Worobec, head of fraud control at FFA, said: “These latest fraud figures are good news but we know there’s no room for complacency.”

She pointed out that the cost of online banking fraud jumped by 55 per cent to a record £39million.

And fraudsters are employing increasingly sophisticated methods such as malware scams, which enable criminals to steal data from computers.

There were 26,000 phishing incidents, in which criminals send people emails that appear to be from their bank asking for account and password details, 26 per cent up on the previous year.

Berkshire-based Wellington College, which has 930 pupils, will from the start of the new school year be distributing prepayment cards to parents and pupils, in a scheme likely to be rolled out by other independent schools and possibly even the state sector in the future.

The Freedom 4 Schools MasterCard allows parents to control much more closely the amount their children spend and where they spend it. The parents will get the “primary” prepayment card which can be loaded with cash. This money can be transferred by the parent either online or via mobile phone to the child’s card – called a companion – who is then free to withdraw money from ATMs or spend it in the school grounds and in up to 26 million outlets worldwide that accept MasterCard. The Freedom 4 Schools card has no credit facility and parents can monitor exactly how much has been spent and where through a website.

“In the past, children have started term with cash or a series of cheques which are then cashed in school,” Tessa Hardy from Freedom 4 Schools said. “That had drawbacks for the school and parents in terms of administration, keeping track where the money was being spent and, of course, the potential for accidental loss.” The card also offers the extra security of chip and pin technology and pupils can receive regular text message updates on their balances so that they can avoid running out of money unexpectedly.

“I like this aspect of the card very much. If a pupil were to run out of money at, say, a station, they could call or text their parents who could then remotely download cash on to the card,” says Susan Meikle, the bursar at Wellington College. Downloads take only a matter of seconds and cash can be transferred from the primary to the companion card in about 10 minutes. Eventually, Ms Meikle says, she would like Wellington College to become cashless. “We are going to see how it goes, but I imagine pupils and parents alike will like it,” she says. Freedom 4 Schools says it already has interest from several other prominent independent schools in rolling out the scheme. Looking further ahead, Ms Hardy even sees the state sector getting involved.

“There is also nothing to stop this from being adopted in the state sector. For instance, dinner money could be loaded on to these cards by parents or the local authority,” Ms Hardy said.

But prepayment cards have a sketchy reputation. Although recognised as a safe and efficient way for parents to control their kids’ spending or for people holidaying abroad to avoid excessive transaction fees, they can still be expensive. “The big bugbear with prepayment cards is the levying of multiple fees. For example, there can be fees for loading money, withdrawing cash from an ATM, or monthly and annual charges even for simply using the card,” said Ricky Bruce of financial information service Moneyfacts.

The Freedom 4 Schools card is far from free. Those parents opting for pay-as-you-go will have to pay £1 to load money on to the card, a transaction fee of 2.75 per cent and cash withdrawal fee of 1.5 per cent. But in return for a £3.95 monthly charge, transaction fees will be waived and cash withdrawal fees capped at 95p.

“These charges are pretty standard for prepayment cards,” Mr Bruce said. “Generally, for those that make a lot of purchase transactions, the monthly fee option is likely to be the cheapest.”

Widespread use of prepayment cards in schools could lead to other dangers, Mr Bruce warns. “Instead of bullying going on to obtain money, it may be used to get a pupil’s pin number. I also worry whether it’s a good idea to get children used to spending on plastic rather than cash even if it is all prepaid and there is no credit facility.”

“Yet prepayment cards do have their uses,” Mr Bruce says. “They can be useful when travelling abroad as the exchange rates on offer can be good. I can also see how they could be useful in a closed environment such as a school as it will allow parents to keep a close eye on what their children are spending.”

The FCMB (Verve) ATM Debit Card is a secure e-payment card powered by InterSwitch with Chip & PIN (Personal Identification Number) features which make unauthorized use of the card impossible. These features provide security for all electronic banking transactions (ATM, POS and Web).

A major distinguishing factor is that the new ATM Debit card is equipped with a micro-computer stored in a microchip in the front section of the card, making it more secure as the stored data in the chip of the card is encrypted which prevents cloning of customer’s data onto another card. This is unlike the old debit card that had a magnetic stripe at the back of the card for storing its data.

In line with the Central Bank of Nigeria’s directive for all Banks to commence the issuance of the Chip & PIN ATM cards to their customers, FCMB becomes one of the first set of banks in Nigeria to implement this regulatory directive.

Nabeel Malik, FCMB’s Head of Retail Banking said the benefits of the Chip & PIN Card include maximizing electronic payment security through the EMV technology, fraud reduction and bigger storage capacity. EMV is an international electronic payment standard developed by Europay, MasterCard and Visa (EMV) – The Three leading electronic payment companies in the world.

He said the FCMB (Verve) ATM Debit Card provides unbeatable reach, matchless access to cash and payment services on all channels on the InterSwitch network.

“The Chip Technology guarantees that information stored is not accessible to unauthorized persons. The other security features ensure that transactions across other payment channels on the InterSwitch network remain secure and uncompromised” Nabeel stated.

The FCMB Head of Retail Banking who confirmed that migration has commenced, recommended that all customers of FCMB should go to their nearest FCMB branch to migrate from their existing cards to the bank’s new Chip & PIN Card.
He further explained that with the commencement of the migration to the Chip Card and EMV technology, the bank is working towards enhancing customer confidence in electronic payment and card based transactions.

Alain Job sued Halifax in March 2007 over a number of withdrawals from his bank account made in 2006, which amounted to £2,100.

Mr Job claims he has been the victim of fraud, possibly by a card cloning technique, and that he should be compensated.

However, Halifax argued that the card used to make the withdrawals was Mr Job’s own and that if he did not access the money then he must have been negligent with his card security.

Mr Job had referred the case to the Financial Ombudsman Service, but the organisation - which mediates disputes between financial services firms and consumers - backed Halifax.

The case is the first of its kind in the UK and a verdict is expected in a month - and if Mr Job wins, it could call into question the security of the chip and pin mechanism.

According to UK payments firm Apacs, chip and pin has helped to reduce fraud since its inception a number of years ago.

Growth in fraud has been caused by areas not protected by the technology, Apacs claims.

Alain Job is suing Halifax, claiming that a fraudster withdrew £2,100 from his account at cash machines despite the fact he did not lose his card and changed his PIN as soon as he received it. The bank refused to refund the money, claiming that its Chip and PIN system is secure.

The case is the first of its kind and could set a precedent for whether or not the security of the chip and pin chip technology is vulnerable if it were proved Job’s card had been cloned or hacked, it could be the bank’s responsibility to pay.

Job said he was optimistic about winning. “I want the opinion of a judge on this,” he said.

In the US, the burden of proof in such cases falls on banks ­ since a precedent-setting case in the 1990s they have been obliged to provide CCTV evidence of a cardholder making a withdrawal or give the money back.

But in the UK, banks can produce evidence from their computer systems to show that a withdrawal appears to have been made by a customer, said Ross Anderson, a security expert at Cambridge University.

The Halifax said it was confident it would win the case.

“We will be defending the action quite strongly. This is not about the money ­it is a point of principle,” said a spokesman.

Already in wide use around the world, many Canadians are starting to use a new generation of debit and credit payment cards that contain an embedded microchip and use chip and PIN technology.

Canadians shopping with chip cards at chip-enabled store terminals experience only minor differences in the way they pay for goods. Cardholders insert their chip card into the terminal where it remains for the duration of the transaction and follow the prompts provided on the terminal screen before they remove their card. For credit card chip transactions, cardholders enter a PIN, as they do today with debit cards, rather than sign a sales slip.

Why is the chip card better?

Chip cards and chip card terminals work together electronically validating both the card and the cardholder using a PIN. Chip and PIN is the next evolution of electronic payments in Canada, helping to make an already safe credit and debit card payment system even more secure.

“As fraud continues to evolve, we know it’s important to continue investing in fraud prevention and detection technology,” said Stacy Bennett, RBC’s head of Fraud Strategy and Initiatives. “We’ve also issued over a million chip and PIN cards to our clients giving them enhanced security and peace of mind.”

Canada’s conversion to chip technology will take a few years to complete because millions of credit and debit cards will have to be replaced with chip cards. At the same time merchants across Canada are converting to terminals capable of processing a chip transaction. For the time being, Canadians will continue to see both “chip and PIN” and “swipe and sign” transactions depending on the terminal used. Chip cards will be issued with a magnetic stripe so that cards can continue to be used around the world in countries that have not yet transitioned to chip and PIN technology.

Nine hundred Torex Retail POSes have been installed across Thorntons’ UK estate - some 380 stores - which has led to customer queuing times being cut by two-thirds.

The £800,000-plus contract deal was signed in June last year and the bulk of the installation was completed by the end of October 2008, with the last handful of stores getting the kit after Christmas.

Thorntons selected Toshiba to deploy the kit, IT director, Steve Harris, said. “When going through the original tendering process we looked for a hardware partner that could specifically hit the timescale that we wanted to achieve,” he said.

Harris said the retailer’s legacy POS system was long overdue an upgrade, being well past its sell-by-date at 12-years-old.

“We couldn’t develop the system any further - the vendor didn’t want to develop an old system so it was limiting us in terms of the type of promotions we wanted to run, in terms of speed of performance and the fact that the support for the system was very limited,” he told silicon.com.

The increasing frequency of hardware failures was also causing headaches - not least because spare parts were becoming harder to come by.

But the key driver for deploying a new system was to integrate chip and PIN and speed up transactions.

“Previously we had a Chip and PIN system and a POS system and there wasn’t any integration between the two so, with anybody paying by card, the operator of the till would have to do dual entry. For us the big win was getting that integrated Chip and PIN system,” Harris said.

Another benefit of the new system is enabling “near real-time” sales information, Harris said, putting an end to overnight batch reporting.

Thorntons has not yet fully implemented all the functionality of the new system either - and phase two of the rollout will see features including stock management within stores, webmail, contactless payments and fraud analysis also coming online, said programme manager, Jim McLauchlan.

“Really it’s opened up a lot more functionality than we ever had access to on the previous system,” Harris added.

Mitchell Elegbe, chief executive officer (CEO) of InterSwitch, who spoke to newsmen at the verve media parley, noted that the CBNs directive is in the best interest of banks, merchants and cardholder as it is in tandem with global best practices.¼br /> This, he said, is because existing magnetic stripe cards have limited storage capabilities, offer little flexibility for business development and are easy to duplicate. He disclosed that the company has launched a campaign tagged “Get More Out of Life” to educate and enlighten Nigerians about the features of the verve card brand.¼br /> Elegbe explained that the Verve Chip and PIN card is specially designed by Nigerians for the world. Commenting on InterSwitch contribution to the development of the Nigerian e-payment space, Elegbe said: “Today, there are over 7, 300 ATMs on our network, over 12, 000 PoS terminals as at the last day of January, we have all the 24 banks in Nigeria connected to the switch while 19 state governments rely on the platform for the collection of internally generated revenue. There are over 28 million InterSwitch enabled cards active on the network as at today”.¼br /> He pointed out that despite the global switch to Chip and PIN cards the company and its partner banks in 2003 opted for the simple magnetic stripe technology because of its adaptability and cost at that point in time.¼br /> “Therefore, the next level for us is to begin to replace the 26 million cards out there with this new technology that is more secure and customer friendly. After an extensive research and design that spans over two and the half years, we have come up a card that delivers more security features, more channels, more reward, more value to cardholders, banks and merchants”, he added. In terms of security, the Interswitch MD boasted that the company’s Chip and PIN smart card is one of the smartest cards around. “We have woven a number of security features and fraud management solutions incorporated into it. These fraud initiatives were developed to address various types of fraud which have been observed in the last couple of years.”¼br /> They include: Fraud Aware (this is the Cardholder Awareness initiative - aimed at educating cardholders about the importance of safeguarding their PINs), Fraud Insure - card fraud Insurance, Money Guard - SMS alert and response system.Also, Data Guard - this ensures that international standards such as PCI DSS standards, ISO 27001, Identity Guard - a token for two-factor authentication, Chip Authentication Program (CAP), Fraud Watch - a portal and email for fraud reporting.

Handelsbanken says that since introducing Chip and PIN, card fraud has almost been eliminated in Sweden. However, criminals are now using stolen cards in countries that have yet to implement the system.

“Over 95 percent of the crimes that affect our card customers are committed outside Sweden or online,” says Carl Renström, head of card services, Handelsbanken.

The bank already allows customers to lock and unlock their cards for Internet purchases and is now extending the option to overseas transactions.

Rising fraud committed abroad has also hit UK cardholders since the introduction of Chip and PIN. According to payments association Apacs, losses from fraud committed overseas by criminals using stolen UK card details was up 77% - or £90.5 million - to £207.6 million in 2007. Apacs says fraud abroad now accounts for over one third - 39% - of total losses.