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Visa Claims Chip Cards Reduced Fraud By 70% (arstechnica.com) 186

An anonymous reader quotes Ars Technica: Although only 59 percent of US storefronts have terminals that accept chip cards, fraud has dropped 70 percent from September 2015 to December 2017 for those retailers that have completed the chip upgrade, according to Visa.

There are a few ways to interpret those numbers. First, it seems like two years has resulted in staggeringly little progress in encouraging storefronts to shift from magnetic stripe to chip-embedded cards, given that in early 2016, 37 percent of US storefronts were able to process chip cards. On the other hand, fraud dropping 70 percent for retailers who install chip cards seems great. Chip-embedded cards aren't un-hackable, but they do make it harder to steal card numbers en masse as we saw in the Target's 2013 breach.

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Visa Claims Chip Cards Reduced Fraud By 70%

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  • Seems I heard that Oct the Chip Readers were mandatory. Seems not yet - can anyone fill in these blanks?
    • by Anonymous Coward

      Seems I heard that Oct the Chip Readers were mandatory. Seems not yet - can anyone fill in these blanks?

      They've been "mandatory" for a while now. But many of them don't work.

      A group of retailers filed a lawsuit over it but I don't think it has gone anywhere.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      They aren't mandatory but they do charge higher fees to process the transaction if you don't use the chip. Online card purchases still act like swipe cards since all you have is the basic info so it's not like they can just force all transactions to work like using the chip.

    • They are not mandatory. BUT the retailer is now on the hook for fraud. Not the CC co. or the processor. The retailer also must buy the new equipment. If the CC co.s really wanted to stop fraud. They would provide the readers themselves. Payback would be less than a year.

    • by Anonymous Coward on Saturday February 24, 2018 @10:50PM (#56183399)

      Can I please have it this way instead? "Visa caused 70% of fraud by not implementing decades old system earlier than they did."

      The glass can be half empty.

      • Can I please have it this way instead? "Visa caused 70% of fraud by not implementing decades old system earlier than they did."

        The glass can be half empty.

        Presumeably, with less fraud, the fees paid by merchant and by consumer should drop, or am I joking?

    • by taustin ( 171655 )

      "Mandatory" is a very flexible term. Merchants can, in theory, still imprint cards with a knuckle buster and deposit those in the bank like checks.

      The actual rule is that if you don't use a chip card reader, and there's a dispute, the merchant pretty much automatically loses. For merchants who don't have problems with fraud to begin with, it's an expense they can easily do without.

      That's why the 59% that have adopted the new technology have produced such a disproportionate reduction in fraud: They're the on

  • Now we have one great place left for skimmers to set up: gas pumps. I have yet to see one that is NFC capable or that included a chip reader.

    And in the past three years, I've had my card skimmed twice -- it's become annoying enough that I ended up relegating a single card to gas station use, so that when it gets skimmed again I won't need to cancel any sort of auto-pay setup against it.

    It's crazy to me that credit companies don't get stricter with gas station owners.

    • by Mashiki ( 184564 )

      Every gas station in Canada uses chip & pin, most were rolled out a year and change before it became mandatory up here. The real problem up here since everything is chip & pin is actually banks and ATM's that are owned by banks but deployed in variety stores and so on. Hitting banks is the big one right now, the fakes are getting damned elaborate too replacing the entire front bezel to pull the card data and pin.

    • I find it interesting to note that it's the year 2018 and humans are still working on ways to be able to conduct financial transactions without fraud or theft. There must be something that, how something that seems like it would be such a simple thing actually is not...

      • There's no perfect solution. Paper and metal currencies offer good anonymity and ease of use but there are issues with trust and they cannot be sent over distance easily. Credit cards are fast and easy, but they are not free, require a central authority to clear transactions, and usually the private keys are revealed during each transaction. Crypto-currencies allow transactions without a central authority, but offer no recourse for reversing charges and there are currently many limits as to what they can
    • by taustin ( 171655 )

      I've seen gas pumps with NFC. More than once. Not universal yet, but it's getting more common.

      (I suspect it's because California is so oppressive to gas stations anyway that the pumps get replaced a lot more often than most places anyway.)

      • by jrumney ( 197329 )
        I saw it for the first time about a month ago, but it didn't actually work when I tried it. I suspect someone forgot to adjust the pre-auth amount to be under the limit for NFC transactions.
        • by AK Marc ( 707885 )
          NFC has no limit. NFC without PIN is limited to $80 for me. So the gas pump authorizing more than that requires NFC plus PIN. NFC is contactless chip. The limit for my NFC is the chip limit (the card limit).
    • by Junta ( 36770 )

      The weird part is the proprietary gas payment apps in lieu of putting in chip readers.

      Like if I want to pay for gas with my phone at a shell station, I would *have* to have a Chase credit card.. for some reason.

      Exxon has a more open ended payment app, and to their credit it works... most of the time.

    • I have never seen a pump without a chip reader.
      Probably because I live in a modern country like New Zealand, where chip cards have been widespread for well over a decade. Some of them don't even have a magstripe reader.
      I did have a magstripe only card back in the 90 and early 2000's though.

  • fraud has dropped 70 percent from September 2015 to December 2017 for those retailers that have completed the chip upgrade, according to Visa.

    For years credit card companies allowed people to be defrauded because it was cheaper for them. When they were forced to use better security they tell us "Surprise, it's more secure! Who knew? Nobody knew!" Assholes, all of them.

    • For years credit card companies allowed people to be defrauded because it was cheaper for them.

      Actually, for years the major credit card companies have had zero-liability policies for fraud. Do you own/use a credit card?

  • by jtara ( 133429 ) on Saturday February 24, 2018 @10:33PM (#56183361)

    "Martha? Would you ring up Woodrow 2-4-2 and ask the president of the bank to wire $10,000 to Sparky up in Reno out of my account? It's 5-4-7-9. Thanks!

  • what the bull leaves out in the pasture! I will dissect anything I purchase if I decide to! If I can not I do not want it in my life.

    Just my 2 cents ;)
  • Chip and signature in the USA was designed to combat card skimming and cloning of mag stripes - it can't stop other kinds of fraud. Yes, it can help prevent fraud of stored data as chip data is different then mag stripe data - but the root of the fraud is cloned mag stripe data - often from skimmers.

    If no terminals accept mag stripe, then cloned cards won't work. Someone can still copy the data off the front and back of card visually, and they can still clone the mag stripe. But then the fraud is reduced t

    • by jrumney ( 197329 )

      Chip and signature in the USA was designed to combat card skimming and cloning of mag stripes

      Adding a chip has absolutely no effect on card skimming. The only way to combat that is to remove the mag-stripe, but for backwards compatibility, I'm not aware of anywhere in the world that has done that yet.

      Once your mag-stripe data is captured, someone somewhere else in the world (where the backwards compatibility will kick in automatically, because the card is foreign and can't be expected to keep up with local standards) will clone the data onto a magstripe only card, and use it to withdraw money a

      • by AK Marc ( 707885 )
        And the ATM withdrawal will fail and lock the card and the account. Bob in Toledo, who has never left OH, is suddenly withdrawing daily limit in Ukraine? That'll lock the card down. Bob gets a new card in the mail in 2 days, and Ivan the Russian hacker gets nothing.

        With the wide-spread hacks into large retailers, the transactions are looked at with a microscope. Purchases under $10 have an 80% chance of locking out my card, and in places the card company knows I am (small transactions to "test" stolen
  • Shift the risk. Make merchants with no chip capability liable for fraud.

  • I returned from a 10-year stint in Australia, where I stopped carrying cash, wrote only two checks, and for purchases under an amount set by the merchant -- $30 in some cases, $100 more typical -- simply tap the card, faster than cash. I looked into it here and the friction apparently was the cost of the chip. Apparently not. Anyone know what the heck is keeping tap-pay from becoming a thing if the chips are already on the cards?

    As to card details being compromised for online purchases, hate PayPal all you

  • with the rollout of contactless pickpocketing.
    • by AK Marc ( 707885 )
      The rest of the world uses NFC chip + PIN, so skimming will not get you a perfect duplicate (though could allow some "card not present" charges). The US is slow to chips, so obviously slow to chip+ PIN as well.
  • What the fraud rate would have been if we'd done what we should have done and gone to Chip&Pin?

    Even though I have PINs on all my cards, only Target uses it. Even in Europe and India my cards comes up "signature", not PIN.

    But if the fraud rate is low now, that probably only means that the crims haven't figured out how to defraud it – yet.

    P.S. I'm still waiting for restaurants to get the portable readers that the wait staff bring to my table and my card never leaves my sight.

  • I can't seem to understand how the US can be so behind the curve on some really important issues. One of them regarding financial/banking issues is the matter of the freaking chip&pin cards (or more the lack of proper use of them). Never ever have I seen any US store require chip&pin authentication, they always just read the chip and make you sign, which is crazy a**stupid. I thought they saw finally the light when chip cards were getting introduced - very, very, really late vs. everyone else -, but
  • See Ross Anderson's "Light Blue Touchpaper" for a timeline, https://www.lightbluetouchpape... [lightbluetouchpaper.org]

    As other writers noted, Visa has 70% less fraud because they can now disclaim responsibility for all the fraudulent charges on the older, more popular equipment. There might be a small decrease in fraud overall, but the "70% less" is really "70% the merchant has to eat, as we're not accepting fraud reports from their equipment".

    • by DarenN ( 411219 )

      The entire point of the liability shift was to try and reduce the card present fraud in the system. The level of skimming and cloning in the US is outrageous when fixes for the very issue were in use worldwide for decades. Even chip and signature puts a dent in it because the chip effectively cannot be cloned. The acquiring banks that lease the equipment to the merchants and process their transactions had - literally - no incentive to update. They were rolling out updated equipment that still did not suppor

  • "...although only 59 percent of US storefronts have terminals that accept chip cards, fraud has dropped 70 percent from September 2015 to December 2017 for those retailers that have completed the chip upgrade... it seems like two years has resulted in staggeringly little progress in encouraging storefronts to shift from magnetic stripe to chip-embedded cards, given that in early 2016, 37 percent of US storefronts were able to process chip cards."

    There are still many storefronts that cannot process chip card

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