Just a few months ago, plastic card issuers and manufacturers had come up with a new way to protect payment information from being hacked or stolen. By using an EMV chip in every plastic card, consumer data would no longer be transferred through the magnetic stripe on the back when paying by credit or debit card. But it looks like internet criminals have switched tactics, making this entire concept pointless.
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More Identity Fraud Victims Since The EMV Chip
Whenever someone’s financial information is stolen and used, it is labelled as a case of identity fraud by law enforcement. After all, someone tried to pretend to be the rightful cardholder when making a payment with that information, spoofing somebody’s identity. With the launch of EMV-enabled credit and debit cards, those problems were supposed to go away completely.
Unfortunately, that was far from the case, as the number of identity fraud victims has increased by three percent compared to the previous year. However, there was some positive news as well, as the total amount of money stolen from these attacks declined by as much as six percent. In the end, a total of US$112 billion was still lost due to identity fraud, a number that is far too high by any standards.
Keeping in mind how the number of identity fraud victims reached its second highest peak over the past six years, the question becomes what else can be done to avoid these incidents from taking place. Introducing the EMV chip should have lead to a drastic reduction in the identity fraud rate, but internet criminals are one step ahead of law enforcement once again.
Instead of targeting existing card owners, fraudsters are now looking for people who just received their new account information. While EMV chips are used by a lot of banks right now, not every financial institution in the world is using the technology. With so many banks still using the old magnetic stripe method, there are plenty of targets for internet criminals.
Furthermore, people who receive their EMV card for the first time might not always pay by chip, but still resort to the old method. This is one of the main issues with technological innovation through existing payment methods, as it can take a long time for people to get used to paying in a different way.
Bitcoin Remains The Most Secure Payment Method
Unlike traditional payment solutions, popular digital currency Bitcoin is not suffering from identity fraud. Before funds can be spent from a Bitcoin wallet, the end user has to sign off on every transaction with their private key, which is usually stored on the device they make the payment from. None of this information is exposed to third parties, removing fraud from the equation.
But at the same time, Bitcoin is also suffering from a lack of adoption, as consumers and retailers have to get used to the idea of dealing with digital currency. However, as more people become aware of how their financial information is not safe from harm through traditional finance, it will only be a matter of time until they start looking for alternative solutions.
Source: Finextra
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