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/   Voices

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/   Spotlight

It’s exhausting just trying to keep pace, let alone stay ahead. Every provider in every business feels the pinch.

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/   Voices

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/   Voices

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Five EMV lessons for the US

/   Voices

The EMV liability shift has occurred in the US, so what can we expect to see happen in the coming months and years as a result of this change?

Cause and Effect: If you build it, will they come?

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/   Spotlight

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Fast Facts: Student Loans

January 22, 2013
/   Insights

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Intuit 2020 Report: The Future of Financial Services

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/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

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December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Making Banking Fun: Gamification in Financial Services

August 5, 2013
/   Insights

Recently, the team sat in on American Banker’s webinar, “Gamification in Financial Services: Five Proven Ways to Get an Edge,” which shared how leading brands in financial services have applied gamification to reach...

Technology M&As: The Beats Go On

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/   Insights

The ongoing fascination with Apple’s $3 billion purchase of Beats Electronics is entirely understandable, because it’s a cool story. However, it also says a lot about what’s going on between finance and tech.

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

What We’re Reading

May 5, 2011
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below. Virtual Banking Worlds Provide Tangible Lessons American...

What We’re Reading: Thanksgiving Edition

November 22, 2012
/   Spotlight

Below are interesting stories the staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom. Mobile Thursday? Plans for Thanksgiving...

Often when we talk about card fraud we lump together credit and debit cards. But while this is convenient, it’s maybe not always telling the full story.

The reason is that there are subtle variations between the two, in terms of how they’re used, the transaction limits and so on. In other words, a debit card and a credit card represent two very different propositions for the fraudster.

Latest figures from the Federal Reserve in the US suggest something that perhaps we should already know – PIN debit cards suffer less fraud than signature credit cards.

“Among general-purpose cards, single-message (or PIN) debit card transactions (including both purchases and ATM cash withdrawals) in 2012 had the lowest fraud rates by both number and value,” the US central bank states.

In the US, PIN debit cards saw a fraud rate of 0.89 transactions per 10,000. That was a lot lower than the 3.92 figure reported for credit cards requiring a signature. Hardly surprising, but then the credit card figure was also significantly higher than that of signature debit (3.07 per 10,000 transactions).

So why would this be? Obviously fraudulent PIN transactions are going to be a lot harder to carry out than something needing a signature at the point of sale. But why the variation between the two signature types?

What it could suggest is that the way we use our signature debit cards varies considerably from the way we use our signature credit cards and that this is having an impact on fraud. People tend to use their debit card at the ATM, but seldom would they insert their credit card into one.

Card skimming ought to mean that signature debit cards (non-EMV) are more prone than credit cards in as much as there is an added potential point of compromise. Yet clearly this is not the case.

Instead we have to look to the relative value of each fraud – the amount that fraudsters are stealing each time. Here we can see how the economics of card fraud – it is a business like any other – matters.

Credit cards often have limits of thousands of dollars, but how many of us have this much in our current account? A criminal can steal a lot more money in one transaction from a credit card than a debit card. There is also the possibility that credit card firms require a higher value to flag a suspect transaction than debit card providers because again the way these are used varies (people tend to spend higher value amounts on their credit cards, although even this is changing to a degree).

Clearly credit cards are a more attractive proposition to the fraudsters and this means they are devoting more attention to this sector. Card issuers need to ensure they adjust their fraud detection strategies to keep up.


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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Brad Strothkamp

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.