Major Banks and credit card companies such as American Express have developed “fraud free” and encrypted chip-enabled cards to cut costs while transferring the burden of fraud compensation onto the merchant. However, many are still unaware that a cheaper and more secure technology already exists.
The credit card manufacturers have integrated EMV chips (Europay, MasterCard and Visa) into the credit cards, which create unique payment codes for every transaction. The implementation of the EMV technology disables the duplication of payment credentials to settle other transactions.
“Chip-enabled cards have a unique transaction code, specific to that transaction and it changes every time you use the card, explained Monte Cook, executive vice-president of Commerce Bank.” Therefore the fraudsters, if they get data, if they steal your data off the card, they can’t use the card.”
According to Cook, credit card fraud costs card issuers and banks around US$3.4 billion annually. He explained that the implementation of the EMV technology could save banks hundreds of millions of dollars per year, as the businesses will be responsible for covering the losses from fraud, not the banks.
“Therefore, we’ve reduced our losses. The consumer basically comes out ahead too.