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This week marked the anniversary of when chip and PIN came into force in the UK. Five years’ on, there are apparently more than 140 million chip and PIN cards in issue in the country and more than one million chip and PIN card terminals in place, not to mention the fact that many European countries have now rolled out EMV. As a result, great strides have been made in the fight against fraud with the National Fraud Authority (NFA) recently revealing that the financial services industry last year saw a reduction in its losses to fraudsters due to improved fraud prevention methods involving plastic cards.
However, at £3.6 billion a year, the amount of money the industry is at deficit is still excessive and while chip and PIN has been effective in face-to-face fraud it does not protect against card-not-present (CNP) attacks. In fact, the NFA statistics show that there was a 14% rise in online banking fraud with losses climbing to £60 million a year. This increase has been attributed to fraudsters using more sophisticated methods to target their victims through malware and a spike in phishing incidents. With e- and m-commerce becoming ever more popular, it is therefore of paramount importance that more stringent security measures are put in place to combat the threat.
In addition to being thorough, any fraud prevention system also needs to take into account the customer’s needs and therefore must be as convenient and user-friendly as possible. One issue with chip and PIN has been users’ propensities to forget their unique PIN, which has resulted in countless new PINs being produced and sent to customers at an additional cost for banks. Equally, the current security schemes for online banking such as Verified by Visa (VbV) and MasterCard SecureCode similarly require passwords to be memorised by their customers, which incurs the same forgetful problem.
Instead of the current scenario involving multiple passwords, it is clear that technologies that marry convenience and security need to come to the fore. One model that is gaining traction in the fight against fraud, specifically identity fraud, and that meets these disparate requirements is biometric technology. In verifying a person based on the electronic identification of that card presenter using their body features, impersonation is almost impossible and the need for additional hardware or passwords is eliminated. Only with such technology – whether hand in hand with chip and PIN or not – can fraud levels see a real dip.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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