Smart cards have helped Malaysia significantly reduce losses due to counterfeit-related fraud, according to Visa.
Speaking at a conference on IT governance in Singapore Tuesday, Ingo Noka, Visa Asia-Pacific's head of payment security services, said there was virtually "no counterfeit fraud in Malaysia" as at September 2005.
In contrast, Visa had lost about US$400,000 through counterfeit-related fraud in November 2004, according to notes in one of Noka's presentation slides.
Noka noted that Malaysia had replaced its magnetic-striped credit cards with chip-based ones early last year, he told ZDNet Asia in an interview.
According to Noka, the reduced counterfeit losses is an indication that smart card technology is more secure than magnetic strip and not economical for crime syndicates to copy.
The bad news, however, is that fraudsters have moved to neighboring countries such as Thailand, said Noka. Statistics from the e-payment provider show a huge spike in counterfeit-related activity in Thailand between March and June last year.
Other forms of fraud, such as those committed using stolen credit cards, are also on the rise, he added.
While Malaysia has succeeded in stemming fraud committed using counterfeit credit cards, other countries may not yet follow suit because of the resources required. Citing Thailand as an example, Noka said: "[Visa] members are very keen to move the chip migration forward a little bit faster than in other countries…[but] it's always a balance of cost and security, because chip migration takes time and will require investment."
According to Noka, Visa is also keen to adopt two-factor authentication for online payments. Banks in Europe and Asia have already implemented or are planning to implement the use of a second factor for Internet banking. Over time, two-factor authentication can be expected to extend to the area of payment, he added.
In the Asia-Pacific region, Visa lost about US$152 million to fraud in 2005, a 5 percent increase over US$146 million in 2004. Globally, fraud-related losses jumped 19 percent, from US$2.1 billion in 2004 to last year's US$2.4 billion.
Last October, Visa announced a US$200 million effort to combat fraud. It also offers credit card merchants and processors in the Asia-Pacific region a quarterly vulnerability scanning and self-assessment services to determine if they comply with the Payment Card Industry Data Security Standards.
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Posted by Habib Helmi_rad on Wednesday, May 23 2007 03:42 PM