Canadian debit network Interac reported today that fraud on its cards has fallen to $38.5 million (CAD) in total losses in 2012.
The figure is substantially lower than the prior year’s debit card fraud losses, which totaled $70 million, and the highest loss recorded for a single calendar year in 2009 of $142.3 million. The annual fraud loss rate for 2012 equated to 1.2 basis points of overall dollar volume flowing through the network. Much of the credit for reducing Interac’s issuers’ fraud losses is due to the implementation of EMV chip-and-PIN in Canada.
From Interac’s press release:
“Our multi-layer strategy to fight debit card fraud is producing significant results and continues to reinforce strong confidence in the safety, soundness and security of the world-class Interac system,” said Caroline Hubberstey, Head of External Communications for Interac Association and Acxsys Corporation. “The ongoing conversion to chip technology is a vital tactic in our fraud prevention strategy, which is supported by other core elements that are critical to our continued success. These include valuable partnerships with law enforcement, financial institutions, acquirers, merchants and educational outreach to consumers.”
Chip technology is both secure and smart. It gives the card the ability to store and process data securely. Unlike a magnetic stripe, this processing power makes it extremely difficult to copy and reproduce. This processing power is used, together with cryptography, to allow the card and terminal to communicate with one another to carry out security checks to ensure the card is valid. Chip technology also enables advancements like Interac FlashTM, which is currently being rolled out across the country.
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