A new protection mechanism for bank and credit cards has been patented worldwide by BNZ, the bank announced today. The technology is aimed at putting an end to “skimming” of cards, where the information on the magnetic stripes is captured by fraudsters without customers’ knowledge.
“Skimming” is the unauthorised and usually, unnoticed, capture of card magnetic stripe information by illegal modification of payment devices, or through a separate card readers. Fraudsters can also capture PIN data and then create dummy or clone cards in order to drain the victim’s account or make illegal purchases.
Invented and developed in New Zealand by BNZ’s Fraud Initiatives Manager Michael Turner, the security technology is called Liquid Encryption Numbers or LEN.
with customers not required to get new cards – all they need to do is to visit a BNZ ATM.
“It’s simple to understand and uncomplicated to implement,” Turner says. “On standard bank and credit cards, the information stored on the magnetic strips is static and doesn’t change. With LEN, we’ve made that information dynamic so that it changes every time a customer visits a BNZ ATM – this means if criminals copy the data on the cards they won’t be able to use it for fraud.”
It also means customers are not required to get new cards – all they need to do is to visit a BNZ ATM to update the existing card.
“We believe this to be a world first and we invented it here” says BNZ CIO Peter Yarrington. “This is a fantastic New Zealand innovation that allows BNZ customers to use their credit cards with confidence. LEN effectively prevents criminals from using cloned cards and what’s really exciting is that it also helps us to pinpoint where the data was stolen from.”
An important benefit of LEN is that if the bank detects a card has been compromised but not yet fraudulently used, it doesn’t need to be blocked, which is inconvenient for customers who have to order new cards.
“Instead, we can just ask customers to visit a BNZ ATM where their cards can be secured by updating the LEN – this is a simple, automatic process, with minimal inconvenience to customers,” says Yarrington.
LEN has been rolled out to New Zealand customers for the past two years, and already, BNZ has seen a decrease in fraud figures.
LEN works with chip cards too and can be used worldwide. The technology recently won a customer service award by the ACI Worldwide for innovative fraud protection capability.
Many New Zealanders are still unaware of the threat of posed by skimming fraud, which is on the rise around the globe. In Australia in 2009 payment fraud totalled around $A200 million, credit card fraud made up 75 per cent of that total. According to a survey by ACI Worldwide there was a 129 per cent increase in card skimming incidents 2008 over the year previous.
The bank says in the UK card fraud cost more than £600 million in 2008, a figure expected to increase as fraudsters employ new organisational methods and