How EMV Chips and Advanced Cybersecurity Combat Payment Card Skimming?

Highlights

• Introduction
• The advent of EMV chips
• Cybersecurity solutions by leading entities to prevent card skimming

Payment card skimming is a form of financial scam where scammers illegally acquire sensitive data from the magnetic band of debit, credit, or other payment cards. They use small, discreet devices, known as skimmers, which are inconspicuously attached to legitimate card readers, such as those found at gas pumps or ATMs. These skimmers secretly capture the information encoded on the magnetic strip of cards, including the expiration date, card number, and occasionally the cardholder’s name. Once this information is stolen, it is used to create counterfeit cards or make unauthorized transactions, resulting in financial losses for the cardholder.

Addressing this threat demands a blend of technological innovation, public awareness, and regulatory actions to strengthen payment system security. These measures are essential to prevent unauthorized access and misuse of sensitive card information. Consumer vigilance and the adoption of robust security measures by financial institutions and businesses are essential in reducing the risks associated with payment card skimming. The payment card skimming industry is anticipated to cite an impressive CAGR of 9.9% by 2032. The surge in cross-border payments, credit card transactions, and fingerprint payments has increased the prevalence of card skimming incidences. 

The shift from magnetic stripes to EMV chips

Previously, using payment cards at the point of sale involved swiping the magnetic stripe on the card through a compatible reader. However, these cards are vulnerable to risks like card cloning and theft of card information, as data can be easily extracted from the magnetic stripe. Nowadays, payment cards have advanced and are equipped with an integrated circuit chip, which enhances payment security.

EMV chip cards were developed based on a global standard created by Europay, Mastercard, and Visa, representing a significant security upgrade over traditional magnetic stripe cards. Also known as integrated circuit cards, these chip cards feature a computer chip that provides enhanced security. Each time an EMV chip card is used, it creates a new, unique transaction code that cannot be reused. This feature makes the stolen card information ineffective for fraudsters, as they cannot use it for cloning or fraudulent activities. When an EMV card is inserted into a chip reader, the process takes a few seconds longer than swiping. During this time, the chip transmits encrypted information to the bank for cardholder verification, which makes it more difficult for criminals to intercept and misuse the data.

The role of advanced cybersecurity in dealing with evolving skimming techniques

Rising awareness of vulnerabilities in electronic payment systems, combined with the increasing frequency and sophistication of skimming attacks, has led to a growing demand for strong cybersecurity solutions. Organizations are investing in the latest technologies, encryption techniques, and fraud detection systems to protect their payment infrastructure from skimming threats. The advanced and adaptable nature of modern skimming requires a comprehensive cybersecurity approach, fueling the industry for solutions that offer thorough protection against unauthorized access, data breaches, and fraudulent activities.

The need to uphold customer trust and protect sensitive financial data has increased demand for cybersecurity solutions designed to combat the emerging threats of payment card skimming. Industry players understand that proactive investment in cybersecurity solutions secures their operations and safeguards their clients' financial assets.

Marqeta's RiskControl product

Marqeta introduced a new platform, RiskControl,  to assist card issuers in optimizing their card programs and managing risk across all stages in April 2022. RiskControl offers businesses extensive risk, compliance, and fraud management features, enabling them to concentrate on their growth and development.

RiskControl is powered by a robust new fraud management tool called Real-Time Decisioning. This tool allows card programs to implement precise transaction controls, effectively reducing payment fraud. The suite also features upgraded versions of our Know Your Customer (KYC) and Disputes products, with the previously introduced 3D Secure tool. These core components of RiskControl track risks and compliances regarding customer onboarding, KYC, payment transactions, and dispute management.

Galileo introduced a 3D Secure product to enhance protection against credit card fraud

Galileo Financial Technologies launched its 3D Secure solution in July 2024 to help clients guard against card-not-present (CNP) debit and credit card fraud. The new Galileo 3D Secure Access Control Server is now available to consumers in Canada, Latin America, and the US. 

The protocol enhances security by requiring cardholders to verify their identity through an extra password, one-time code, or other methods when making online credit and debit card transactions. Additionally, 3D Secure shields businesses from disputes, as transactions authenticated using this protocol shift the liability for chargebacks from the business to the card issuer.

Wrapping up

To effectively address the increasing risk of payment card skimming, a comprehensive approach is necessary. Adopting EMV chip technology, advancing cybersecurity measures, and promoting public awareness are integral to protecting sensitive financial data. These strategies collectively help prevent fraud, ensuring secure and trustworthy payment systems.

Contact us for further information on preventive measures for payment card skimming.

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