Article

Insiders point to security compromises as the ATM's greatest foe

An ATM discussion among LinkedIn users reveals ATM security and some advanced ATM functionality as having the greatest impacts on the ATM industry over the next two years.

January 12, 2010 by

Editor's Note: All posts from LinkedIn have been copied exactly as they appeared in the discussion forum.

Over the last several months, I've been leaning more on social-networking outlets for news. I've come across some interesting tweets on Twitter, and in-depth discussions on LinkedIn through the groups I'm involved with.

One group discussion, initiated several months ago within a group called "ATM Group" grabbed my attention. The topic: "What do you think is the greatest challenge facing the ATM industry over the next 2 years?"

Some of the responses might surprise you.

Mark Smith, business development manager for Long Beach, Miss.-based Triton Systems of Delaware Inc., pings security as the hottest issue. He also suggests that the United States needs to seriously consider making a move to EMV, the Europay, MasterCard, Visa standard that mandates chip and PIN use in Europe and other parts of the world.

Smith writes:"Security will begin to play a major role in deployment strategy. From physical devices that prevent ATMs from being removed from a location, to added surveillance to assure all who access the ATM are using the device legitimately. In bad economic times, we need to be concerned about increased attacks on ATMs and the individuals that load cash in to ATMs. We must remain vigilent and learn from the other parts of the world that are currently dealing with very sophisticated criminal operations."

Jasbir Anand, fraud product manager at Actimize, agrees that fraud losses will be the most devastating realities facing the industry in the near future. But Anand does not see physical ATM security as being the primary concern, as Smith does; rather, Anand sees massive data-security breaches that compromise PINs and card numbers as posing the greatest threats.

Anand writes: "I believe the largest risk to ATM as a channel is fraud losses as a result of Mass data compromises. Mass data compromises involve the theft of millions of cards track data which and can also include PINs. We still have not seen the organized crime groups that perpetrate counterfeit card fraud work in conjunction with hackers that steal data. Hackers are still selling stolen card data in smaller batches. If these groups get together the potential fraud losses will be significant enough to bankrupt smaller issuers and also seriously erode consumer confidence in the ATM channel.

"Individual attacks on ATMs, although a serious problem, are well managed and limited to consumers that use a compromised device in the time period that it was compromised. Existing strategies to identify the common point of purchase and reissue high risk cards works well for individual points of compromise, but cannot be used for mass compromise scenarios where tens of millions of cards are compromised."

Andrew French, ATM sales manager at TestLink Services, sees the advent of prepaid-card dispensing and contactless-card technology taking more center-stage positions.

French writes: "I do agree that data security is the largest risk. However, i think the expansion of prepaid technologies, contactless payment systems and the lack of international standards on compliance will also create challenges."

Eddy Truitt, vice president at On Site Financial Inc., says processors are likely in the near future to put more demands on ATMs and the companies that deploy them to comply with higher security standards.

Truitt writes: "I think after another major security breach on the processors level — they will require better security on that side, then we are going to go thru another ridiculous des- encryption-equip upgrade, then 6 months later, Visa will decide it is not good enough for them, so there will be another 2 tier equipment upgrade — then we will probably be getting away from mag readers in the next 3 years too and moving towards the smartcard.

I will bet anyone a cheeseburger thats how it goes down."

I agree that security, both physical and system-based, will be top-of-mind for ATM deployers. But I don't know that I would consider security the greatest challenge. In my mind, the implementation of advanced technology poses the greatest challenge — not in that it will necessarily be difficult to launch advanced technology, but in that deploying advanced technology will no longer be an option, but a necessity.

While basic cash dispensers have their role to play, over the next two to five years, consumers will demand more functions. It's that simple.

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