Cards giant American Express will start using an encryption technology developed in Wellington by BNZ from this week, potentially opening up a massive global market for the technology designed to stop credit card skimmers dead in their tracks.
This Liquid Encryption Numbers (LEN) technology is installed at BNZ ATMs and effectively changes numbers on the magnetic stripe on the card whenever it is used legitimately. Any skimmed card is then identified and blocked automatically and immediately because it doesn't have the correct numbers, allowing the original card to continue to be used and identifying the fraudster immediately.
The software has been patented globally and will be licensed by BNZ for used internationally in the multi-billion dollar credit and debt card industries.
LEN was launched on BNZ debit cards and Visa and MasterCard credit cards in 2008. Losses from this most common form of card fraud dropped by more than half once LEN was introduced, BNZ said.
"This BNZ-developed technology is capable of identifying and actively locating card skimmers and works to reduce the broad reaching effects of this criminal activity," BNZ Chief Operating Officer Stephen Mockett said.
See the video above for Mockett's explanation of how LEN works and its potential for use and licensing globally.
LEN is designed to stop card skimming where the information on the magnetic stripes is captured by fraudsters without a customers’ knowledge.
It works in conjunction with existing fraud detection tools and changes the magnetic stripe data every time the card is used in an ATM, rendering any stolen card data obsolete.
This means LEN card holders can continue to use their card safely even though it has been skimmed.
“Based on BNZ’s experience to date the technology successfully identifies and declines on average 61% of first time fraudulent card present transactions," Mockett said. LEN can eliminate up to 95% of card reissuance resulting from fraud.
“The benefit to BNZ customers is that they don’t experience any down time if their card is compromised, leaving them without the use of their credit card, which is particularly problematic when they are offshore. LEN enables customers to continue using their existing card while it immediately recognises any cloned cards and declines any transactions that may be attempted," he said.
Here's BNZ's background on how skimming works:
“Skimming” is the unauthorised and usually, unnoticed, capture of card magnetic stripe information by illegal modification of payment devices, or through a separate card readers.
Fraudsters can also capture PIN data and then create dummy or clone cards in order to drain the victim’s account or make illegal purchases.
Many New Zealanders are still unaware of the threat of posed by skimming fraud, which is on the rise around the globe.
In Australia in 2010 payment fraud totalled more than $A200 million, credit card fraud made up 77 per cent of that total.
According to a survey by ACI Worldwide, in the past five years, nearly one third of consumers have been victims of credit card fraud with card fraud increasing by 60 percent since 2009.
In the UK card fraud cost more than £600 million in 2008, a figure expected to increase as fraudsters employ new organisational methods and evolving technologies.
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