Will You Pay By Chip or Stripe?

Us Canucks certainly love our debit and credit cards: carrying around cash is just sooo passé! Of course along with electronic payments comes the risk of fraud, identity theft, and counterfeiting: an issue that has been running rampant in the country over the past few years. An Ipsos Reid study in February 2005 reported that two millions Canadians had been affected by identity theft. In an effort to reduce such incidences, we’re seeing more and more chip-enabled terminals surfacing.

What are these? Debit or credit cards with chips embedded in them, such as RBC’s Platinum Avion VISA card, are inserted into a chip-enabled machine, and remain in the machine until the customer has completed the transaction. With standard magnetic stripe cards, the customer swipes his card, or inserts and immediately removes it, then proceeds with the transaction. According to RBC, chip-embedded cards provide “increased protection against counterfeiting and skimming fraud”.

A trial run using cards with this new technology is set to take place in Kitchener-Waterloo, ON this fall, in hopes to eventually roll out the technology across all cards, ATMs, and retail terminals in Canada. RBC, who has just announced 10 million successful chip transactions, says it plans to switch from the standard signature method to a PIN code for its Avion VISA customers in the future. Moneris Solutions already offers more than 75,000 chip-enabled point-of-sale units across Canada.

Although I’ve luckily never been the victim of a major identity theft incident, I have had unauthorized purchases made on a credit card for minimal amounts. When asked how this could possibly have happened (after all, I knew for a fact that, at the date and time of the purchases, I was at home with my wallet, and VISA card, in my possession!), my bank told me that a “fake” version of my card could simply have been made by someone skimming the information from a machine. It made me shudder to even think someone could, and would, do such a thing.

Hopefully a Canada-wide chip-based system will help put a stop to identity theft and credit card fraud.