News
Mobile signatures counter ATM fraud
February 13, 2008
HELSINKI, Finland — A new report highlights the threat of credit-card skimming at ATMs and points of sale. Despite wide-spread adoption of the chip-based-card authentication in the United Kingdom, fraudulent payouts from skimmed and cloned bank and credit cards continue.
"In the first six months of 2007, skimming fraud accounted for £72.3 million," said Mike Barwise and Daniel Bachfeld, authors of the report.
That represents a 37 percent increase from the £52.8 million lost in 2006.
"A major failing of many chip-capable ATM implementations is the option to ‘fallback' automatically to the readily copied magnetic strip, if a chip is absent or not readable," the report says. "Because many overseas ATMs (not least in the U.S.) cannot cope with chips, the magnetic strip is unlikely to disappear in the near future. The triumph of convenience over security strikes again."
Valimo Wireless Ltd., a Finnish company, says its mobile-signature solution protects against ATM skimming and card cloning, as well as related frauds like phishing and identity theft. Mobile signatures secure ATM and payment transactions through asymmetric encryption and digital signatures using mobile phones as a separate channel.
"Garanti Bank and Is Bank in Turkey already use mobile signatures to service consumer loan customers straight from their ATMs," said Tapio Vailahti Valimo's chief executive. "The same process is a convenient way of securing money withdrawals from those machines that still rely on magnetic-stripe information."
With mobile signatures, each transaction that relies on a card's mag-stripe prompts the cardholder for a signature request to the mobile phone. The signature includes the amount of the transaction and location of the ATM. The mobile signature is then returned by the user via the mobile network.
Valimo says the process allows banks to establish whether a withdrawal request is legitimate as well as establishing a legally binding record that the cardholder has approved the pending payout.
Mobile signatures work across borders using the same roaming arrangement for sending international text messages.
Valimo is a finalist in the category of Most Innovative Consumer Application for the GSMA Mobile Innovation Global Awards, sponsored by Ericsson during the GSMA Mobile World Congress 2008 Feb. 11-14 in Barcelona.
Trends / StatisticsNorth AmericaBanking Executive SummaryTransaction ProcessingRetail / Off-PremisesBank SecurityDebit / CreditOtherBank / Credit UnionSoftware
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