Credit card security measures

Worried about credit card fraud? Find out about the security features available to keep your money safe.

The popularity of credit cards has led to an increase in credit card theft and fraud, both in Australia and overseas. According to data from the Australian Payments Clearing Association (APCA), there was $437.8 million worth of fraud on Australian-issued scheme credit, debit and charge cards in 2015. APCA says this data also shows card fraud increased from 58.8 cents in 2014 to 66.8 cents per $1,000 spent, driven by a 21% increase in card-not-present (CNP) fraud.

To help protect credit card customers from these issues, banks and card schemes around the world have poured millions of dollars into technology, services and other resources. Here, we look at the range of credit card security measures currently available and how they work to keep your accounts safe.

Chip-and-PIN technology

This is now a standard feature on credit cards and most debit cards. The first part of this line of protection is the embedded chip found on the front of the card. Your card details are stored as encrypted data on this chip, so it is difficult for a criminal to steal your information when you make a payment in person.

The second line of defence with this technology is the use of PIN-verification for transactions. This is where a PIN or Personal Identification Number is used to authorise a transaction, whether it be a purchase or a refund. Your PIN is usually four or six digits long and is a more secure way of paying than a signature, which can be copied by criminals and used to fraudulently authorise payments. According to APCA, this technology, along with closer co-operation between financial institutions and law enforcement teams, has helped reduce counterfeit fraud by 10% between 2014 and 2015.

Fraud detection and monitoring

Many lenders now make use of fraud-monitoring services, such as FICO's Falcon anti-fraud software. This adaptive software uses pattern recognition to analyse your account and detect any unusual transactions.

For example, if a credit card was used once in Sydney at 8am, and then again at a store in Los Angeles at 12pm, the account would be flagged for suspicious activity. An anti-fraud team member would then contact the credit card account holder to verify the transactions or take further action as needed.

Fraud detection and monitoring services also consider different spending patterns. For instance, let's say a customer regularly spends $100 a week on petrol and $100 a week on groceries. If there is suddenly a transaction for $10,000 worth of laptops, the team will mark it as "suspicious" and take credit card security measures such as contacting the cardholder and blocking or even cancelling the card.

Internet banking security measures

There are several layers of security when you want to use your credit card online. These include:

• Automatic logout. If you leave your Internet banking account idle for too long, you'll be logged out to prevent anyone near your computer from making money transfers or payments.
• SMS code. To help verify transactions or Internet banking account activity, you may be sent an SMS with a unique code that you must enter to authorise your transaction. Some credit card companies use SMS codes to verify Internet banking account activity or online transactions.
• Time of last logon. Many Internet banking platforms will show you the last time you logged on. This can help you detect any criminal activity (i.e. someone else logging onto your account).

ATM anti-skimming devices

ATM skimming refers to the process where someone illegally copies your credit card information so they can access your account. Today, many ATMs have safeguards against this. These include:

• PIN-pad covers so cameras can't be used to capture your PIN being entered
• Internal anti-skimming devices which notify a bank when a card skimmer is installed on an ATM and block the skimmer from transmitting information
• Anti-skimming inserts which are added into the card reader slot and prevent skimming devices from being added to the ATM

Online shopping protection

Mastercard and Visa both provide optional services that can help protect your card when shopping online. We've outlined the key details below:

Mastercard SecureCode

This optional service allows you to setting a unique SecureCode for your Mastercard credit card. When you shop at a participating store or retailer, you'll be prompted to enter in your SecureCode before the transaction is processed. This extra level of verification can reducing the chance of a criminal using your details to pay for an item.

Verified by Visa

Verified by Visa works in a similar way to Mastercard SecureCode. You set up your verification method and then when you shop at a participating store online, your card will be recognised and you'll have to verify your transaction details before the payment can be processed.

Encryption protection

Most shopping sites and Internet banking services are protected by encryption protocols such as Secure Sockets Layer (SSL) technology. This basically protects your data – including your credit card number and other personal information – from being accessed by third-parties.

You can easily tell if a site is secured in two ways. If the URL of the site begins with 'https', or if there's a lock somewhere in the window of the browser which displays security details then the site is secure. Look below to see how this might look on different browsers.

Mozilla Firefox

Google Chrome

Safari

If you follow these credit card security tips you will have a much better advantage in the fight against card fraud. Shopping can be an enjoyable if you use the right security tips to keep you safe.