STRATEGIC PARTNERS
La Caixa is eliminating fraud through deployment of contactless ATMs. Using technology developed by Fujitsu, cardholders wave their cards at the ATMs card reader.
April 20, 2011
ATM skimming, which is a worldwide problem, has met its Kryptonite. Remember Kryptonite? Lex Luther, Superman’s bald and evil comic book archenemy, used Kryptonite to turn the “man of steel” into marshmallow man.
La Caixa, Spain’s leading bank, which is based in Barcelona, seems to have found skimming’s Kryptonite and in the process also has killed off another growing form of ATM fraud--card trapping.
La Caixa is eliminating fraud through deployment of contactless ATMs. Using technology developed by Fujitsu, cardholders wave their cards at the ATM’s card reader. The reader recognizes the card, and the cardholder then types in his PIN to operate the ATM.
Skimming, the most-common form of ATM fraud, occurs when thieves steal information from the card’s magnetic stripe and also steal the card’s PIN. This is done by thieves who attach devices to the ATM card slot to capture magnetic-stripe information. Once a cardholder swipes his card into the card slot, the data on magnetic stripe also is shared with the thief.
Crooks also install small cameras, unseen by the consumer, around the ATM to record the cardholder typing in his PIN. The thieves use the information to manufacture fake cards to loot the cardholder’s bank accounts.
Lachlan Gunn, coordinator of European ATM Security Team (EAST), an Edinburgh, Scotland-based organization that regularly publishes reports on card fraud at ATMs in Europe, said contactless-ATM technology will stop skimming in its tracks.
“They [contactless ATMs] will reduce fraud as there is no possibility to a read a magstripe during a contactless transaction, skimming is not possible,” Gunn said.
Contactless ATMs also will put an end to card trapping, which occurs when the cardholder’s card is physically trapped inside the ATM and the PIN is compromised. Again, thieves install a device inside the card slot to hold the card inside the slot. They retrieve it when the angry cardholder storms off to seek help.
Contactless technology would leave thieves at a loss. “As the card is not placed into a reader, card trapping is not possible,” Gunn said.
The deployment of contactless ATMs gives financial institutions another effective weapon in the fight against ATM fraud.
Prior to the machines’ deployment, operators have fought skimming primarily through the use of EMV-enabled ATMs.
According to EAST, financial losses from skimming attacks for the 12-month period ending December 2010 reached 123 million euros (U.S. $178 million) compared with 315 million euros ($457 million) in December 2007. Although overall fraud losses fell, seven of the 22-contributing countries reported increases in skimming-related losses. In some cases, the losses were significant, Gunn said.
So far La Caixa has installed contactless ATMs in Barcelona, Stiges and Palma. The contactless ATMs have twin screens, one for transactions and another for operational and commercial support, bank officials said.
The bank, which operates 8,000 ATMs nationwide, plans to install the contactless ATMs on Catalonia Balearic Islands, which are near the eastern coast of the Iberian Peninsula. La Caixa officials said they installed contactless ATMs to make transactions faster for customers. The bank also has made them safer.
