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CARDS & PAYMENTS | Contributed Content, Singapore
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Suzanne Tong-Li

Safer and secure ATM transactions in Asia

BY SUZANNE TONG-LI

ATM cards, especially those using magnetic stripes, are increasingly being exposed to sophisticated fraud attempts during transactions. Fraudsters are getting more intelligent and creative in devising methods to obtain users’ Personal Identification Numbers (PIN) and data stored in the ATM cards’ magnetic stripe.


In comparison to magnetic stripe cards, chip-based ATM cards definitely offer greater security. While it is easier to obtain card details off the magnetic stripe – commonly done by installing a skimming device or even through retrieving card information from discarded ATM machines – chip-based cards make it harder for criminals to create clones as they can store credentials dedicated to the specific card, which protects users against counterfeit fraud. Switching to chip-based cards also allows banks to take advantage of the EMV (Europay, Mastercard and VISA) standard.

With EMV, card issuers have a uniform standard to help ensure that the payment cards being issued will work in any EMV compliant acceptance infrastructure across the world. Cardholders gain confidence in knowing that EMV’s anti-counterfeiting technology will protect them against the risk of fraud. During each transaction, the chip generates a unique transaction code that can be verified by a genuine point-of-sale (POS) or host system, making the cloning of the card difficult.

Typically there are two types of EMV cards, namely SDA (Static Data Authentication) and DDA (Dynamic Data Authentication). While more expensive, cards with DDA technology have better security features, as there have been reports about skimming attempts on SDA cards which leverage on these cards’ inability to provide authentication for transactions conducted offline. Thanks to its dynamic mode during the authentication process, DDA shuts down on this form of skimming.

Chip-based technology is fast becoming the global standard for ATM card security. Chip cards are now the dominant card type for transactions throughout Europe, and increasingly in Asia. Fraud reduction is a major driving force behind Asia’s banking industry migration to EMV. While not a requirement, the adoption of chip-based technology is important to the card business as it goes a long way in enhancing security against fraud.

Many countries are in the process of migrating to the EMV technology with Japan, Korea, Taiwan, Hong Kong, Indonesia and Malaysia leading the way in Asia. This technology will make it much harder for criminals to use fake cards in cash machines and shops and can reduce the losses incurred by counterfeit fraud. It has been a proven success, as exemplified in the case of Malaysia which fully converted to EMV chip ATM cards by end-2005, resulting in credit card fraud dropping by 95 per cent from US$5.9 million in 2003 to US$0.3m in 2005.

Countless banks and other major payment transaction organisations throughout the world already recognise the many advantages of chip-based cards over magnetic-stripe cards. In addition to higher levels of security and greater convenience, chip-based cards allow banks to provide personalisation services and contactless payment solutions to their customers.

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Asian Banking & Finance. The author was not remunerated for this article.

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Suzanne Tong-Li

Suzanne Tong-Li

Suzanne Tong-Li is the Senior Vice-President Secure Transactions Business Unit at Gemalto.

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