Protect Your PIN Pad, Protect Your Customers
by Vanessa Walser

Each day, millions of Canadians choose Interac direct payment for their everyday purchases. In fact, Canadians are among the highest users of debit cards compared to other countries around the world, with 50% of Canadians selecting Interac direct payment as their preferred method of payment. While the Interac network is one of the safest systems in the world, debit card fraud, or what is also known as debit card skimming, can occur.

Debit card skimming is the unauthorized copying of electronic data from a debit card. Hidden equipment, such as card reading devices and pin-hole cameras are installed at ABMs or retail locations to collect the card data and PIN of an unsuspecting cardholder. The stolen data is then copied onto a counterfeit card, which is used to withdraw funds without the knowledge of the cardholder.

In 2006, $94.6 million was reimbursed to victims of debit card fraud. While debit card fraud represents less than 1% of all transactions, the Interac Association and its members work together continuously to fight debit card fraud and protect cardholders.

Monitoring and detection systems to track suspicious transaction patterns, collaborative programs with law enforcement, and education and prevention programs are just a few of the daily activities in place to combat fraud. Fraudsters, however, are constantly evolving their techniques. Investigators are now seeing methods where fraudsters steal store PIN pads, tamper with their internal components and place them back into the store, where they are then able to download the card information that’s swiped through the PIN pad in order to create counterfeit cards. 

Fraud affects everyone, including merchants. If your customer’s debit card is compromised at your location, your brand or business can suffer. 

Everyone has a role to play in preventing fraud. While the Interac Association and its members maintain the security of the Interac services, merchants can play a significant role in the fight against fraud by keeping their PIN pads out of sight when not in use. Following are some key security tips that merchants should consider:
• Treat your PIN pads like cash. Keep PIN pads out-of-sight when 
not in use. 
• Check your PIN pads and ABMs regularly for anything unusual.
• Lock up PIN pads at closing.
• Include log-in sheets for accountability of PIN pads in cash open
& close procedures.
• Consider adding surveillance cameras.
• Know your employees - practice diligent hiring procedures and
check references.
• Remind your customers to protect their PIN when entering it at every 
transaction. 
• Be aware about debit card fraud and talk to your payment service
provider about other steps you can take to prevent it from happening
at your location.

Over the next several years, the Interac Association and financial institutions are transitioning to chip card technology, a new generation of payment card technology that will put the power of a computer onto the card and will provide increased protection against debit card skimming. The first chip transactions are already taking place as part of a market trial in Kitchener-Waterloo, Ontario. Financial institutions will begin to roll out chip cards nationally beginning fall 2008. 

Complete migration to chip technology will take several years, given the vast number of ABMs, POS terminals, and cards that must be upgraded. Until then, we must all work together to prevent debit card fraud and protect Canadians.

For more information about debit card fraud prevention, or chip card technology, please visit www.interac.ca.

Vanessa Walser is Manager, Fraud Management, Stakeholder Programs for Interac Association, which is Canada’s national debit network.