Skimming is a $2 billion industry – one you don’t want to be a part of. Internationally, the European ATM Security Team (EAST) reported that skimming losses rose 18% from the first half of 2014 to the first half of 2015. EAST documented more than 8,400 fraud attacks related to ATMs January-June of 2015 in Europe, and found that more than 97% of the total reported losses in that time period were related to skimming.
Those are some big numbers – but here’s one more to consider: The average skimming incident costs a bank $50,000 per ATM, as well as incalculable losses in consumer trust. Low-tech fraud may be rising in popularity, but high-tech fraud is where thieves see the biggest ROI. As your organization builds strategies to grow revenue, drive efficiencies and delight consumers, there’s a crucial question you must ask yourself: Am I prepared to lose $50,000 today?
That’s a pretty scary question. But I think it’s an important one to face head on. Our security teams witness the reality of financial fraud every day, at a global scale, and we don’t want any of our customers to encounter a threat that could have been avoided. And this is the thing about skimming: It can be avoided.
EMV Alone Won’t Work
In North America, financial institutions are migrating consumers to EMV cards – but that change will take years to fully implement, and for the foreseeable future debit cards will still carry the magnetic stripe. In Europe, which implemented EMV in the ‘90s, EAST reports skimming losses were up 11% in H1 2015. As long as consumers are inserting cards with magnetic stripes into ATMs, skimmers have an opportunity to gather their information.
Add to that the emerging technology at work. Today’s skimmers are savvier than ever. Skimming components have gotten smaller and more difficult to spot. In fact, back in 2012 paper-thin skimmers began to show up on terminals, and were being readily bought and sold on the internet. In 2014, a new type of skimming device was discovered: it could be inserted into the motorized card reader or DIP reader, bypassing existing low- and mid-tier anti-skimming technology.
FIs Must Introduce a Layered Approach to Security
We don’t think financial institutions should have to fear skimming. When we reimagined the card reader module for our latest terminals, we made security our top priority.
First, our engineers addressed a skimmer’s primary function: reading the stripe. Current skimming technology relies on the ability to read a card’s entire magnetic stripe in a short-edge orientation, as the card slides in and out of the reader. By rotating the card reader itself, to long-edge insertion, we were able to utilize an encrypted moving read head inside the reader. That change makes it impossible for current skimmers to capture the card’s full data. ActivEdge is the world’s first card reader to introduce this moving head.
And because a layered approach to security is the best approach, we incorporated additional features such as automatic gate-locking and device-pairing. Whether FIs implement new Diebold terminals or upgrade their current card readers, an ActivEdge module paired with the terminal prevents the installation of fraudulent devices with individually calibrated software.
When we talk with customers about this technology, we often get asked, ‘Is it really effective?” I understand why people might ask this question. On the surface, rotating the reader seems so simple. Yet the technology behind this module is incredibly innovative – and thwarts all known skimming fraud. And during focus groups conducted globally, we found consumers readily accepted the behavior change. In fact, nearly 80% responded positively to long-edge insertion without any knowledge of its security benefits. Once informed, more than 90% rated it as their most desired method of inserting their card.
Our team of experts works behind the scenes to stay one step ahead of the fraudsters and offer our customers solutions that work. Want to find out more about how an ActivEdge card reader could benefit your security strategy? Let’s start a conversation.