US firm MagTek, which specialises in devices and systems geared at securing bank cards and other financial documents, is currently in talks with two of the larger banks in Jamaica over delivering a detection system that identifies counterfeit cards much like fingerprint detection.
MagTek's chief security officer Tom Patterson, confirmed discussions were taking place with the financial institutions as well as with one of the largest secure processors in Latin America, but he told the Business Observer that the system, called MagnePrint, is not yet approved for deployment.
"While we will rely on the Jamaican banks for local regulatory compliance and adoption, based on our prior experience and with local support, we could roll this out throughout Kingston in time for the Christmas holidays," Patterson said.
MagnePrint examines and verifies the unique traits of cards' magnetic stripe, for which, much like fingerprints, no two cards have the same combination of ferrous oxide particles.
The process of skimming and duplicating cards has been the preferred method of choice for scammers who obtain the card data using skimming devices at ATMs and point of sale terminals. This data is then written onto a blank card and used at an ATM; photographic equipment also capture customers' PINs. However, Patterson, told the Business Observer that MagnePrint can tell when the data, though valid, is written on the wrong card.
"Every magnetic stripe on every credit and debit card, including the ones already in our pockets, is made by spraying billions of tiny magnetic particles onto a plastic (Mylar) strip. Each one of these billions of particles is itself a tiny magnet, which gets pushed and pulled based on the randomness of nature," Patterson explained. "The combination of these billions of tiny magnets on our cards creates a unique magnetic fingerprint, different for every card ever produced in the world. All MagTek does is read the card's MagnePrint when it's swiped, and in addition to the bank checking your balance, the MagnePrint is also checked to ensure that it matches your original card. If yes, the transaction goes through, but if not, the bank or retailer is notified immediately, and they have the opportunity to stop the fraud before they lose any money or goods," he said.
"Since MagnePrint is already operational elsewhere, and no changes are required to the cards or consumer behaviours, at pennies per transaction all of the Jamaican ATMs could be secured for less than one per cent of the reported losses this year alone," Patterson said. "MagTek's MagnePrint system is based on a natural scientific discovery, not new technology, making it very affordable, simple to deploy, and not susceptible to some hacker trying to crack its code," said Patterson.
Financial institutions in Jamaica lost $245 million as a result of card fraud last year, with the National Commercial Bank (NCB) reportedly incurring $100 million of those losses for the year. So far 2010 could be a record year for card fraud as Scotiabank alone reported losing $150 million within the last nine months as a result of the practice.
In addition to the actual losses, the institutions face hefty operational costs associated with resolving the fraud, including interaction with the disputing customer and merchants. Last year, worldwide merchant fraud losses amounted to more than 20 times the total value of consumer fraud losses of approximately US$4 billion, according to the LexisNexis True Cost of Fraud Study.
Gail Abrahams, senior manager, corporate communications at First Global Bank (FGB) said while the institution "does not have significant debit and credit card fraud losses", the process can be challenging to deal with.
"Debit and Credit Card fraud is a global phenomena that affects banks and consumers worldwide and therefore measures have to be in place to sensitise members of the public. Both types of fraud can be challenging to manage as we're dealing with criminals with a large network of information and skills that target unsuspecting persons," Abrahams said. She said while debit cards require a PIN that is unique to each person, this is not the case with credit cards, making their users "easy prey" for fraudulent persons.
Patterson said MagnePrint works with most major brands of ATMs, point of sale terminals, and new mobile payments area with readers for iPhones, iPads, MACs, Blackberrys, Android-based phones like the Droid and Nexus One. The readers can also be used at gas pumps, kiosks and vending machines.
MagnePrint was tested in Chile last year following an upsurge of card fraud there. Banco deCredito e Inversiones, (BCI) reported zero fraud after using the technology on nearly 1000 ATMs. Within eight months, the bank spotted and intercepted more than 1000 attempts at fraud according to a report published in the American Banker.
Patterson said he is working within the Caribbean to make the magnetic fingerprint data available. "For Jamaica we work with a regional company called Seguritek.net, which operates the secure processor for the Chilean bank BCI that I mentioned before," said Patterson.
Until such a system is deployed, Abrahams said there are many ways that customers can themselves reduce the incidence of card fraud. She said customers should never send credit card numbers by email, don't click on links within emails that ask for your personal information as they may be used to lure people to phony websites, and never enter your personal information in a pop-up screen as legitimate companies such as Banks never ask for personal information via pop-up screens. "Be vigilant and alert to your surroundings, and pay close attention to your cards when conducting transactions," Abrahams said.