I mentioned in a previous blog that the use of stolen credit cards to purchase merchandise is one of the most common forms of fraud. The negative affects are not only realized by the business, but also impact the consumer whose card was stolen. The national debate about how best to fight credit card fraud is expected to heat up in 2011 with the introduction of point of sale chip and PIN technology.
The point of sale chip and PIN payment technology is believed to be a safer form of payment than the common magnetic striped credit card. The new technology uses a card with an embedded microchip that requires the consumer to enter a unique PIN through a reader to make payment. Conversely, magnetic stripe credit cards require little verification beyond a signature, which opens the door to fraud.
Many major retailers, like Wal-Mart, are eager to implement this technology as a measure to help prevent point of sale credit card fraud. According to a representative, Wal-Mart experienced a significant drop in fraud rates once the card reader system was adopted.
So why aren’t more businesses adopting this technology? There are concerns that consumer credit card data can be breached at each transaction. A technology researcher was able to make purchases with these POS systems in place without knowing the card’s PIN verification code using simple hardware purchased at an electronics retailer. Simply put, a clever thief can access a customer’s credit card number and easily authorize other transactions leaving very little trace.
How is your company addressing credit card fraud? Put processes in place before your business becomes a victim.