What Credit Unions Need to Know About the Rise of Chip and PIN and Risk

According to the Federal Reserve, Chip and PIN technology involving a secure microchip used with a numeric code makes transactions about 700 times more secure than older payment methods.

Is Chip and PIN technology a priority at your credit union in 2015?

Join Ann Davidson, VP of Risk Consulting, Allied Solutions and Joe Majka, Vice President & Chief Security OffEmerging Payment Technologies & Impact on Data Breachesicer, Verifone Inc. on March 4th to learn about Chip and PIN technology and other emerging payment solutions (e.g., Apple Pay, tokenization, etc.) that can help your credit union reduce the risk of data breaches.

Ann advocates that credit unions seize the golden opportunity to reduce risk through the adoption of Chip and PIN technology and shares 5 things you need to know about the impact of the rise of Chip and PIN:

CHIP and PIN’s Golden Opportunity

Chip-and-PIN cards, also called EMV (Europay, Mastercard, Visa), or smart cards, utilize a computer chip embedded in the card to authenticate transactions. When this card is inserted into a chip-enabled reader to make a purchase, the chip on the card communicates with the reader by sending a one-time, dynamic code unique to that transaction.

Implementing Chip and PIN card technology prior to October 1st, when new fraud liability rules take effect will help your credit union:

  • Stop counterfeiting: Makes it impossible for criminals to create counterfeit cards with stolen data because Chip and PIN cards generate a one-time dynamic code that changes with each transaction.
  • Reduce data breach and fraud exposure: Decreases your credit union’s breach and fraud exposure when the physical card is used since Chip and PIN technology security far exceeds magnetic stripe technology.
  • Save time and resources: Cuts the time and resources used by your credit union to process fraud claimsChip and PIN Technology and card reissues associated with card data compromises.
  • Get a reputation boost: Builds your credit union’s reputation for member satisfaction, given that consumers are becoming more aware of available payment security options.
  • Facilitate easier international travel payments for members: Makes international travel payments easier in some cases. Much of the world, including Europe, Asia, and Canada, has already converted to chip technology and some international merchants and ATMs no longer accept magnetic stripe cards.

5 Things You Need to Know About Chip and PIN:

  1. If your credit union has not issued your members a Chip and PIN card, but a merchant has the new Chip and PIN technology, your credit union is held liable when fraud occurs.
  2. If you do not have chip-enabled cards by October 1st, you may be targeted by criminals and may have increased risk exposure to magnetic stripe fraud.
  3. Consider upgrading or replacing your ATM terminals to accept Chip and PIN technology before the card associations’ fraud liability shifts occur in 2016 and 2017.
  4. Credit unions should continue to deploy multiple layers of protection and enhance existing fraud detection systems to combat payment fraud in both the “card-present” and “card-not-present” environments.
  5. Chip-and-PIN does not address card-not-present fraud (i.e., online, mail, telephone, or lost/stolen card fraud).*

Increase your credit unions financial stability, reputation, and member/customer base by seizing the golden opportunity to get rid of risk through Chip and PIN technology Chip in 2015.

Get the knowledge your credit union needs by registering today for Allied Solutions’ Emerging Payment Technologies & Impact on Data Breaches webinar on Wednesday, March 4, 2015.

Presented by Allied Solutions, LLC and NAFCU Services, this webinar is offered at no cost to the credit union community. *Working with Allied Solutions to establish risk management procedures and get cyber liability protection can help mitigate this risk.

 

We’re Embedding Our Best Technology in Apple Pay… and Into All Digital Transactions

Originally posted on Cashless Pioneers blog

Guest post written by James Anderson, Group Head and SVP, Mobile and Emerging Payments, MasterCard

James Anderson_MC

MasterCard is the NAFCU Services Preferred Partner for Credit, Debit, and Prepaid Branded Products.

In bringing Apple Pay to consumers, Apple wanted to deliver the highest quality transactions possible. So who did they turn to? Those who’ve built the scalable payment infrastructure that is the envy of others – MasterCard.

We believe that payments should always be a simple proposition to the consumer – but once you get under the hood, there’s a very sophisticated network in place that enables any of us to walk into a store and make a purchase – trusting that our cards will work as we expect them to. We realize that consumers don’t care about that – but what they do want to know is that their information and their money are secure.  Through the work that MasterCard did with Apple and with the active engagement of the first four issuers – we’ve delivered the most secure combination of technologies that we’ve ever deployed:

Phones_MC

Top Things to Know About Apple Pay and the Security of Our Digital Payments Platform:

1. Apple Pay Transactions Will Work Just Like Any Other MasterCard Transaction

Transactions that originate from Apple Pay will work the same as any other MasterCard transaction. The consumer will see the card they wish to use in their iPhone from the issuer that they are used to doing business with, the merchant sees a MasterCard transaction – either the familiar contactless form in store or Digital Secure Remote Payment for in-app. Apple is never in the transaction path.

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EMV: It’s Time to Talk to Consumers

Originally posted on Vantiv’s Blog.

Guest post written by Patty Walters, Senior Vice President of Merchant Products and Security for Vantiv.

Vantiv is presenting at NAFCU’s Technology and Security Conference, Feb. 11–13 in Las Vegas. Learn more »

In a recent Vantiv/Mercator study, only 15 percent of U.S. consumers said that they have an EMV equipped debit or credit card. That’s not surprising, since the industry is still in the early stages of rolling out EMV. What is surprising is that two-thirds of that group said that they have used their cards in chip mode in the U.S. That’s just about impossible, given the relatively small number of EMV terminals out there. It’s more likely that the chip-card owners used their cards in the traditional way by swiping the mag-stripe.

Still, that finding indicates that consumers are a little confused about EMV. (The study also found that one in five weren’t sure whether they actually had an EMV card.) But why shouldn’t they be confused? To them, this is a new and largely unexplained technology.

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Fraud Insights

Originally posted on forwardbanker.com.

Guest post written by Scott P. Wallace, Vice President of Marketing, Deluxe Corporation.

Deluxe Financial Services is the NAFCU Services Preferred Partner for Check Printing, Online Check Ordering, Check Fraud Prevention, and Member Loyalty Solutions.

Banking margins are being squeezed and fraud continues to rise. This is not a good combination. To combat this, financial institutions want to stay aware of the trends and opportunities to mitigate losses to help improve bottom line profits.

A survey of both financial institutions and non-financial institutions compiled by the Federal Reserve Bank of Minneapolis provided some great insights into payments fraud.

What they found was fraud is a problem across all those surveyed no matter what their asset size, type of institution, or payment products offered. For financial institutions, the payment method most vulnerable to fraud was signature debit cards with over 83 percent experiencing an attempt. However, that’s only one of nine possible methods documented in the survey that fraudsters have tried to use.

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Gamification: Three Steps to Foolproof Engagement

Originally posted in The Federal Credit Union magazine.

Guest post written by Wayne Conte, Executive Vice President, Affinion Group

Affinion Group is the NAFCU Services Preferred Partner for AD&D Insurance, Enhanced Flex Checking, and Identity Theft Protection.

Although the concept has been around for decades, the term “gamification” was coined in 2002 and exponentially gained popularity around 2010. Gamification is the use of game mechanics to engage users and influence behavior. It’s widely used for diverse applications in marketing, education, loyalty building, productivity boosting, security authentication, incentive programs, and more. Chances are you already participate in several gamification programs.

One example of gamification dates back to the 1980s, when the airlines launched their frequent flyer programs. The result is millions of participants earning points or miles in exchange for their loyalty. The airlines quickly determined that air travelers were more interested in achieving elite status than earning rewards. Leveraging the consumer’s need for status —or achievement— is demonstrated in other gamified applications such as receiving endorsements on LinkedIn and “likes” on Facebook, earning badges on TripAdvisor or Yelp, becoming a mayor on Foursquare, or tracking fitness activities with the wearable Jawbone.

According to a Gartner report, more than 70 percent of the Forbes Global 2000 companies will have at least one gamified application by 2014. These companies will invest billions of dollars over the next few years to implement gamification and, ultimately, differentiate themselves through gamification strategies. As consumers become more accustomed to gamification in their everyday lives, it makes good business sense for you to engage both your members — and your employees — in the same manner.

Here’s how to get started:

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