Protecting Against Chip Card Fraud


Recently introduced, EMV or chip and PIN cards are intended to be a solution to the prevalent problem of credit and debit card fraud. These chip cards use EMV technology, named after Europay/MasterCard/Visa, the three companies that outlined the standards for these new cards. The advantage? Each time that the chip card is activated during a transaction, a new unique code is created to confirm the purchase and transmit the cardholder’s information to the retailer. This is a huge difference from swipe credit and debit cards, which use the exact same transaction code each and every time they are used. When the same code is used each time, it’s much easier for criminals to skim the code and use it in future fraudulent purchases.

While chip and PIN technology seems like a huge step forward when it comes to preventing debit and credit card fraud, it’s not a complete solution to the issue. Unfortunately, clever fraudsters have adapted to chip and PIN technology, discovering new ways to commit credit and debit card fraud. Chip card fraud is something Canadian retailers must be aware of in order to implement measures to protect your business. Read on to learn more about some of the most common chip card scams and how to protect yourself against them:

Card Not Present Transactions
Though some consumers and even retailers believe that chip and PIN technology makes new cards fraud-proof, they are incorrect. These cards simply stop one of the major forms of fraud - card cloning. Chip cards do make it extremely difficult to create a copy of a card, but do nothing to stop fraud in the case of “card not present” transactions. Fraudsters can steal card information from chip and PIN cards, and use it for online transactions in which retailers never actually see a physical card. Consumers and retailers both need to be careful to monitor transactions and report any suspected fraudulent use.

Always Use The Chip
Individuals who intend to commit fraud may also attempt to use chip and PIN cards in-store. To protect your business from chip card fraud, always insert a chip card into the terminal when available, with no exceptions. Fraudsters may attempt to avoid using the chip by asking to swipe the transaction so they do not have to enter a PIN to complete the purchase. Make it a store policy to only swipe transactions when the chip is not present.

Keep PIN Information Secure
For would-be fraudsters, the data on a payment card alone is of limited value unless they have the associated PIN to use the card in face-to-face transactions. However, there are ways for the PIN to be obtained and used along with stolen card information. As technology has advanced, fraudsters have employed more sophisticated tactics and technologies to capture PIN information directly from keypads, or by recording transactions with hidden cameras. Both of these methods can be effective in obtaining a customer’s PIN for later use. Criminals use the PIN along with a cloned card to withdraw cash or perform transactions at a retail location.

For more on chip card fraud and protecting your business from credit and debit card risks, stay tuned to the Swift Payments blog!



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