Smart Card technology to prevent fraud

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Smart Card technology to prevent fraud is a summary of various ways that fraud can be prevented using smart cards. This wiki page mainly deals with fraud in Credit Cards and Debit Cards.


Terms used in this article


Automated Teller Machine


Personal Identification Number

General Facts about debit/credit fraud in Canada

  • 44 Million dollars lost in 2003 due to debit card fraud.
  • 100 Million in 2006
  • Numbers on the rise every year.
  • Takes less then a second and your Card is compromised.
  • Smart card technology can prevent this.

Debit and Credit card fraud is a major issue here in Canada. What is basically involved is a group of individuals setting up magnetic strip readers to record magentic data from an unsuspecting person. The PIN must also be either witnessed by a team member or a camera. Then blank cards are filled with the data. Then the cashout phase begins which is when various ATM's are hit and balances are withdrawn sometimes to the point of depositing blank envelopes and withdrawing cash that does not even exist.

A Group of Romainian gang members were busted last year for a total of 4 million dollars worth of fraudulent withdrawls from debit cards and ATMs. They custom made a device to fit overtop of an ATM terminal that would look like part of it, with the keypad and magnetic reader, they would leave it there unobserved for an hour or two, and then recover it before the deception was noted. The device kept track of the magnetic data and PIN numbers.

General Facts about Smart Cards

What a Smart Card Chip looks like internally

What is a Smart Card

  • Smart cards use a microchip embedded onto the card.
  • The chip uses no power, the reader provides the power and reads the information from the chip
  • Smart card chips are encrypted
    • They use RSA and DSA encryption algorithms


  • Invented in 1968. German rocket scientist. Helmut Gröttrup
  • French debit cards in 1992.
    • Carte Bleue.
  • EMVco
    • Company that updates the card specifications.
    • Visa/Debit cards must meet their worldwide standards if the Card is to be successful.

Problems with Smart Cards

  • Chip is not flexible.
  • Big banks estimate it would cost 500 million to convert the system to use smart cards.
  • They have been cracked in the past.

Future of Smart Cards


RFID is a relatively recent technology. It stands for Radio-frequency identification. It is also non powered, so the card will require no battery. It allows smart cards to function without having to make physical contact with a chip reader, they will be able to work wirelessly.

General Tips to Prevent fraud

  • Hide your PIN
  • Watch for signs of tampered card readers
  • Don't lend out your Credit card or Debit Card

See Also

Electronic Voting Systems
Social engineering
Identity Theft
The Mitnick attack
Security and Storage Mediums
Operating Systems Security
Payment Card Industry Data Security Standard

--SJakubowski 23:59, 2 December 2007 (EST)

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