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Canadian payment network champions chips for debit fraud reduction

March 8, 2012

Interac debit card fraud losses to financial institutions resulting from skimming have dropped by more than half from a high of $142 million in 2009 to $70 million in 2011, the Canadian Interac Association announced. The association said that the number of cardholders reimbursed fell to 238,000 to 154,170 in the same period. This represents the lowest volume of fraud losses since data were recorded in 2003.

"Our collective efforts and significant investments in the fight against debit card fraud, particularly the transition to chip technology, are producing tangible benefits," said Caroline Hubberstey, head of external affairs, Interac Association. "The transition to chip technology is all about making a safe system even more secure and that is what's happening. While significant progress is being made, the fight continues and no one is resting on their laurels."

Under Interac rules, card-not-present transactions and fallback to the magnetic stripe are not permitted. Further, given the structure of Interac Online, Internet shoppers can make secure online debit purchases directly from their bank accounts, without the need to provide any personal financial information, including card and account numbers, to online merchants. Stolen Interac debit cards and even PINs cannot be used to complete Internet transactions.

Interac chip debit cards and terminals are currently rolling out across Canada. By the end of 2012 all automatic banking machines and Interac debit cards will be converted to chip technology. Conversion of POS terminals will be complete in 2015. In many cases, conversion is ahead of schedule; as of the end of 2011, 90 percent of Interac debit cards and 84 per cent of terminals (both ABM and POS) had been converted.

For more on this topic, visit our EMV research center.