Financial Health: Smart chips in credit cards

VISA spent much of 2011 attempting to convince merchants to accept an alternative to the magnetic stripe on credit cards to achieve maximum protection against fraudulent transactions. The company contends that embedding a computer chip in the card would provide consumers with significantly more protection from having card numbers pilfered. Merchants counter that the new smart chip technology needlessly requires that new and expensive card reading machines be available in several locations in order to maximize the anti-fraud capability of the cards.

As supporting evidence ,VISA points to a recent high-end restaurant scam operation where waiters took a patron’s credit card and departed ostensibly to complete the transaction at the cash register. What the patron did not realize was that a criminal ring had provided the waiters with credit card readers they could attach to an Android smart phone or an iPhone. Waiters would disappear and before legitimately running the card to create a billing statement for signature, they would slip it through the phone card reader. In a matter of minutes, other members of the ring duplicated the card and either used it to make fraudulent charges or sold it to others. Read Full Story Here



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