News

US a magnetic draw for Canadian fraudsters

March 13, 2012

Now that almost all Canadian payment cards have migrated to EMV technology, some in the financial industry are speculating that Canadian skimming activity will migrate to the U.S., according to a news story at itworldcanada.com.

The Interac Association announced last week that chip technology on debit cards reduced skimming in Canada by 40 percent from 2010 to 2011. Mike Henry, senior vice-president and head of retail payments, deposits and lending at Scotiabank, said, “to the best of my knowledge, chip hasn’t been compromised anywhere in the world in an actual instance of fraud.”

Now that one source of income for Canadian fraudsters has been blocked, they’ll probably find others, the story said, most probably in the U.S. where chip technology is still rare in bankcards and magnetic stripes prevail.

“Once 100 per cent of Canadian cards and devices are chip-enabled the only opportunity for a criminal is perhaps to get that magnetic stripe and go south of the border … and perpetrate some fraud there,” said Oliver Manahan, vice president of emerging payments at MasterCard Worldwide.

However, Avivah Litan, vice-president and analyst at U.S.-based Gartner Inc., says Canada still won't be card fraud-free; criminals will simply move into other other forms of thievery.  “There will be more e-commerce fraud in Canada,” she predicts.

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