Down But Not Out

Written by Evan Schuman
November 29th, 2006

When a group of university-based scientists decided to test the security of contactless credit cards, even they were unprepared for how remarkably non-secure they’d be. That was the backup for the highlight of this week’s StorefrontBacktalk Week In Review show, featuring panelists Patti Freeman Evans, from Jupiter Research, Paula Rosenblum, from the Retail Systems Alert Group, Greg Buzek from IHL, former federal prosecutor/security expert Mark Rasch and Jessica Bryan from Gomez, along with special guest Kevin Fu, Computer Science Professor at the University of Massachusetts and the chief author of the contactless payment report. StorefrontBacktalk Editor Evan Schuman moderated.

In the contactless payment security discussion, Fu said some scientists had been hesitant to even get involved in the study because they believed that the encryption claimed by the cards would make the cards too secure to merit experimentation. Former federal prosecutor Rasch said that the testing showed that researchers didn’t need to break the encryption to violate security, but they merely needed to pass it along intact to the POS (online or offline) to get purchases approved. Jupiter’s Evans wondered whether this would set back online trust of all credit cards.

To listen to the full contactless security discussion, please click here.

Unhappy Online Buyers Will Also Shun The Site’s Brick-and-Mortar Brother

The new Gomez report presents a challenge for retailers, panelists argued. On the one hand, their offline and online units are being treated the same, so they might as well act the part, by allowing online purchases to be returned offline and to advance purchase-online-pickup-offline programs.

On the other hand, retailers, panelists argued, it’s also a good strategy to push the inherent advantages of online (vast inventory, powerful search, speed/convenience) versus offline (personal attention, the ability to try on and examine products, the experience) by making those experiences as different as possible.

Report author Bryan also detailed how consumers tend to blame retailers for online problems that they have nothing to do with, such as traffic that can slow a site down, overall Internet slowdowns, checkout and content that is likely outsourced and software conflicts on the consumer’s computer.

To hear the full panel discussion about the new online buyer habits, please click here.


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Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

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