Concerns have been raised over the security of the new chip and PIN technology after a UK television program showed how to defeat the system by attacking the older magnetic strip.
The investigation by the ITV’s London Programme revealed the alarming flaw in the new technology, which had been championed as the answer to a major rise in identity theft and payment card fraud.
On the program an ‘industry insider’ demonstrated how the chip system could be defeated by over-riding chip security measures using information embedded in the magnetic strip to produce cloned versions of the new cards. The demonstrator achieved the feat by using software and a skimming device bought on the Internet before successfully using the cloned card at an ATM.
The skimming device works by recording data embedded in the magnetic strip onto a smartcard, then significantly, information stating that the card contains a chip can be changed using the illegal software. The data is then copied onto a basic plastic card as a chip-less clone.
The revelations are a blow to the new technology advocates, the fight against card fraud, not to mention the retailers who have already spend millions upgrading their technology.
However, the UK’s Association for Payment Clearing Services (Apacs) has quickly come out in defence of the new system, stating that cards that have been tampered with and fraudulent clones will be detectable by the new system. Sandra Quinn, director of corporate communications, Apacs further stated that the chip information cannot be removed from the magnetic strip, even though that aspect of cards can indeed be copied, making a cloned card unusable.
Despite this confident defence the London Programme and other research continues to highlight the magnetic strip as a weakness to the new system and because many parts of the world, including the US, have not embraced the chip and PIN revolution yet the magnetic strip is likely to stay on payment cards for the foreseeable future.