Why the Heyday of Credit Card Fraud Is Almost Over

Thursday, September 25, 2014

The imminent replacement of magstripes with EMV chips in credit and debit cards will end a golden age of identity theft brought on by flaws inherent in the decades-old infrastructure. Most card scams take advantage of the magstripe’s basic security flaw: that static characters encoded into the stripe hold all the authentication information needed to produce a flawless counterfeit card. In contrast, EMV transactions, which rely on single-use cryptograms, make eavesdropping with a simple card reader fruitless to criminals. Since the UK deployed EMV cards in 2004, card fraud has fallen 32 percent. In the United States, EMV readers are scheduled to replace magstripe readers by 2020.