Smart cards, friend or foe?
According to the December 14 "The Scotsman," Scottish banks are moving in the direction of smart cards and are also investigating biometrics. That's not particularly new information for us. Here's what I found useful in the article:
"One area set to radically change is that the credit card signature looks set to pass into history. Instead, Britain's high street banks want shoppers to tap in four digit PIN numbers at the checkout.
"Bank executives met with Home Office officials last month to propose the move as a way of combating rising credit card fraud, which now costs pounds 226 million a year as the signature has become widely discredited as a security check. Researchers even signed a card 'Mickey Mouse' without being challenged by retailers, and ministers are now expected to back the PIN verification scheme, which was introduced in France over ten years ago.
"There, customers are handed a push-button pad and asked to key in the PIN number for the debit or credit card. If the number is not correct after three attempts, the card would be seized. A computer chip in the card would contain the number, along with the owner's name and address, bank details and the last 100 transactions. In France, the system has helped cut fraud by 80 per cent."
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In other words, a smart card + PIN system, for Point Of Sale purposes, can eliminate 80% of credit card fraud. That means to compete against smart card + PIN in the POS marketplace, biometrics has to show that it is cheaper to implement than simply paying the losses in the remaining 20% of the fraud cases and the very minor PIN administration expenses. Of course, this analysis does not apply to the nascent Internet marketplace. |
