|
Cash card or ‘ATM’ card: used by the customer in order to obtain cash from an automatic teller machine (ATM) by typing in a ‘personal identification number’ (PIN) on the keyboard of the ATM terminal. There are two types of cash card: off-line and on-line. In 2001 UK cash machines dispensed ￡128 billion in 2.2 billion transactions. Individuals used ATMs to meet nearly half of their cash needs last year. ATMs will become the principal source from which individuals acquire cash.
Cheque guarantee card: the issuer undertakes to pay cheques drawn by the customer up to an amount specified on the card, provided certain conditions are complied with.
Chip or Smart Cards: a chip card holds details on a computer chip instead of a traditional magnetic stripe.
Electronic Purse: also known as a pre-payment card. This card has a stored cash value that can be used to purchase goods and services - it is an alternative to cash. The card can be disposable or re-loadable. Mondex and VisaCash are both electronic purse products.
Card Fraud
APACS announced, in 2002 payment market briefing, card fraud cost the UK ￡411.4 million in 2001–an increase of 30% on the previous year. The most significant element of fraud is committed using counterfeit cards, with losses up 50% in 2001 to reach ￡160.3 million. Other major problem areas include fraud on lost and stolen cards (￡114.0 million) and fraud on new cards intercepted before receipt by the genuine cardholder (￡26.7 million). These three types of fraud accounted for 73% of total losses during 2001.
(i) Counterfeit cards
Counterfeiting of payment cards is a significant problem not only in UK, but also in all countries where payment cards are widely used in transaction. What are the shortcomings of exist system from the point of view of security? The problem of authentication of a customer’s instructions lies at the heart of the whole matter.
Firstly, comparing the signature on the receipt and on the card back by the salesperson, from a security standpoint, is vulnerable. Now the four-digit authorization procedure of personal identification number (PIN) personal to customer himself is widely used to authenticate the cardholder’s identity. In February 2002, APACS announced that the UK banking industry is pressing ahead with its fraud-fighting programme to ensure that by 2005 all UK face-to-face credit and debit card transactions will be authorized by the customer keying in their personal identification number (PIN) rather than by signing a receipt. The introduction of the PIN system, to be used with secure chip cards, is the most revolutionary change ever for the card payment system in the UK. Using a better method to identify the cardholder combined with the chip''s ability to verify that a card is authentic will drastically improve security and significantly reduce most types of fraud. There are also some available alternatives which can improve the security are devised, for example the Digital Signature (this will be discussed in section remote payment below) and biometric identification, however they are not be widely accepted for the technical, cost, and other social problem in recent years.
Secondly, the smart card increased security against counterfeit card fraud. Chip technology uses highly sophisticated processing to identify genuine cards and make counterfeiting extremely difficult and hugely expensive. It’s almost impossible to forge without access to the manufacture’s equipment. Over the next two to three years all 100 million debit and credit cards in the UK will be reissued with embedded microchips, with the aim of drastically reducing card fraud losses. The memory capacity of the chip card makes it possible to retain biometric details for identifying the cardholder. Finger and iris scanning and voice recognition have been suggested as possibilities. However, technology is unlikely to be sufficiently reliable to meet the requirements of the UK card industry within the next several years.
|
