Banks bid to thwart ATM fraudsters
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Chip-enhanced cards in place by 2015 but skimmers 'will find way to beat system'
Even though commercial banks will have to replace magnetic-stripe ATM and debit cards with chip-enhanced cards by 2015, there is no guarantee that the new type will prevent fraud from card-skimming and cloning, according to Siam Commercial Bank.
Meanwhile, customers of several banks – including SCB – last week reported withdrawals made in Ukraine and Russia after ATMs had been skimmed in areas near All Seasons Place on Bangkok’s Wireless Road.
Skimming is not a new phenomenon, having been around for at least six years. What has changed is the technology used in such theft, said Pongsit Chaichutpornsuk, executive vice president and head of SCB’s Fraud Management Division.
The banks will, therefore, allocate large sums to improve their ATM technology via chip enhancement, but even this will not prevent thieves from developing new devices to skim the cards, he warned.
“The basic security advice for customers is that they must cover their ATM passwords with their hands in order to avoid thieves’ hidden cameras,” he said.
Typically, thieves use two devices to capture passwords and card data. One is a skimmer to read the magnetic stripe on an ATM card, and the other is a hidden camera at the ATM.
Chip-enhanced technology is already used in credit cards to prevent fraud, but this has made thieves switch to skimming ATMs instead as the magnetic-stripe technology currently in use makes it easy to commit fraud.
Following discussions with the Bank of Thailand, local banks now have to completely switch from magnetic-stripe ATM and debit cards to chip-enhanced cards by 2015 in an attempt to prevent the fraud.
Bangkok Bank is currently the only Thai bank to use a secure debit card with EMV (Eurocard, MasterCard and Visa) chip technology, but its cardholders can use only the plastic at the bank’s own machines.
Pongsit said SCB would start the switch from magnetic-stripe ATM cards to chip cards by the end of next year, with an investment of more than Bt100 million required for card transformation and ATM adaptation.
SCB has around 10 million ATM and debits cards in circulation, and more than 9,054 ATMs.
The back-office process for chip-enhanced technology at ATMs cannot be undertaken as quickly as for credit cards, he said, as the banks rarely have contact with ATM cardholders, whereas credit cardholders receive regular statements from their banks.
In the first phase, SCB will issue chip-enhanced cards to new customers and will contact existing ATM cardholders about switching to the new type of card. The bank will make changes at all its ATMs to comply with the new technology.
In the long term, however, banks will still suffer from skimming despite the major investment in new technology, as determined thieves will eventually find ways to get round the new system and continue to commit ATM fraud, said the executive.
Customers compensated
The banking industry has in fact already spent a large sum in trying to improve technology to prevent skimming. As a result, SCB witnesses ATM-skimming losses of less than Bt1 million per year, he said, adding that all affected customers have to be compensated.
At meetings of the ATM Services Business Club, banks have discussed how they can prevent skimming, with the priority solution being to tell bank staff to regularly check their ATMs for skimmers and hidden cameras, he said. Banks also educate their customers on how to make secure ATM transactions.
