What is Credit Card Security?
Wikipedia states that a credit card is secured by a deposit owned by the cardholder. The cardholder must deposit between 100% and 200% of the total amount of credit desired. In some cases, credit card issuers will offer incentives even on their secured card portfolios. The deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid. The cardholder is still expected to make regular payments similar to a regular credit card. Once there is a default payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus to build positive credit history.
How safe are credit cards?
Cash has its obvious benefits. There is always a lingering fear of identity theft when it comes to credit cards. When you buy a sandwich for $3.95 and you hand the cashier a $5 bill, you know for sure you haven't been ripped off when he gives you $1.05. However, when you give your card to a waitress, you can never be sure she hasn't taken a moment to copy your card number and signature. Credit card fraud has become very rampant.
In Canada, the total credit card fraud losses are approaching $150 million per year. About 250,000 credit cards were fraudulently used in Canada in 2005. Counterfeiters use fake identities to get government assistance, personal loans and unemployment insurance benefits. It is the most common type of credit card fraud and is responsible for 37% of the yearly credit fraud in Canada.
What are Credit Card Companies Doing?
It has an adverse effect on credit card companies. In response to the issues of credit card security, the bigger and more stable credit card companies have come up with secure ways to do business. One security practice is to require the billing address on your credit card for shipping goods. If a thief steals your account number, there is no way he or she will have access to your billing address. Hence even if your card is stolen, it can be used to make purchases that are delivered to your address. Card Code Verification or CVV is debit or credit card security feature during transactions. It is encoded on the metallic strip and is used to verify the validity of the data stored on the card.
Several financial organizations and credit card service providers have come up with various ways to improve credit card security. MasterCard International and Visa have come up with a set of guidelines known as the Payment Card Industry Data Security Standards. It comprises of a list of 12 guidelines imposing strict regulations on transactions taking place between the card company and the merchants. Other methods of credit card security include using firewalls, Secure Socket Layer, using passwords, data verification, credit monitoring and purchase monitor.
How do you protect your Credit Card?
It is not only the service provider’s responsibility, but also the customer’s duty to ensure credit card security and reduce frauds. Here are some principles you can adopt in order to protect your card: Sign your new card as soon as you receive it. Never lose sight of your card while making purchases to reduce the chance of someone skimming your details. Check your receipts against your statements regularly. Never give your card to anyone or share your card details with anyone.
The Canadian Bankers Association cba.ca has been very aggressive to protect consumers as well as their own institutions. Banks and the credit card companies take credit card fraud very seriously, and have highly sophisticated security systems and teams of fraud experts in place to monitor transactions, protect customers and prevent and detect credit card fraud. Customers are protected when using credit cards issued by banks and are not responsible for fraudulent transactions made on their cards. Banks and the major credit card companies are now moving to chip technology for debit and credit cards. In addition to the magnetic stripe on the back, cards now also have a microchip – really a small computer – in the card. When making a purchase, rather than swiping your card and signing a receipt, you now insert it in the store payment terminal, punch in a personal identification number (PIN) and leave your card in the terminal while the transaction is processed. These cards use a technology called “cryptography” that allows the card and the store terminal to communicate with each other during the transaction and carry out security checks to ensure the card is valid. The microchip is state-of-the-art in payment card technology and is extremely difficult for criminals to duplicate. In fact, chips cards have reduced fraud in a number of other countries where they are currently used.
Stay Vigilant
Consumers, credit-card holders, credit card firms, banks and law enforcement agencies need to collaborate to resolve these issues. With the emergence of technology and stricter laws, credit card fraud can be minimized and the welfare of each sector fully protected.
References
wikipedia.org
wikipedia.org
cba.ca
