News & Events

Reducing Fraud at Point-of-Sale Terminals with EMV Chip Technology

January 17 2014 | By Pam Mukiama

Target Corp. has been in the limelight lately as a result of a massive data breach that occurred during the 2013 holiday season. An astounding 40 million credit cards were compromised, possibly at POS terminals available in various Target locations. The retailer has also acknowledged that the names, mailing addresses, phone numbers and email addresses of at least 70 million customers were also stolen.

While Target has yet to disclose the details of how the data breach happened, a number of industry experts have made some deductions of their own. Hackers have devised sophisticated schemes through which they can obtain credit card numbers from unsuspecting victims. One such scheme counts on the use of magnetic stripe credit cards at point-of-sale terminals. Hackers are using what is known as a RAM scraper, which reads the information off the credit card as it is swiped, right before it is encrypted. The RAM scraper then routes that information to hackers in remote locations.

In places where EMV chip technology has been implemented comprehensively, there have been significant reductions in credit card fraud. A chip, unlike a magnetic stripe is very difficult to hack; card authentication and PIN verification are performed automatically and objectively by the chip. The use of dynamic data as specified by EMV also works to ensure that data which could potentially be stolen is rendered useless in the hands of hackers.

Adoption of EMV in the US has been quite slow but following this incident it is likely that merchants, financial institutions, and every other organization with a stake in the electronic payments process will be more eager to adopt the standard. As a payment processing provider, Pivotal Payments is already at work to ensure a smooth transition to EMV chip technology for all our merchants in the U.S. Having a point-of-sale terminal that accepts chip cards is a key element in the battle against credit card fraud. For information on various POS terminals available and how to upgrade your terminal please contact us.

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