Finextra: An investigation by the UK's London Programme uncovered a security flaw in chip payment cards which allows fraudsters to disable and override chip security measures using information embedded in the magnetic strip.
The television program, which aired on March 15, showed an anoymous "industry insider" cloning a chip-based payment card using software and a skimming device bought on the Internet.
Program makers were able to use the cloned card to withdraw cash from an ATM.
The findings of the investigation were presented to the UK's Association for Payment Clearing Services. In a statement, Apacs said: "When fully in place, chip and PIN technology will identify chip and PIN cards that have been fraudulently tampered with in this way, and also fraudulent copies of those cards."
David Cooper, risk management, Lloyds TSB, told the program that although banks in Europe were committed to using chip-based technology, financial firms in the United States have not made much effort to move into chip and PIN yet -- so the industry isn't able to drop magnetic strips from payment cards.
