MONTREAL—Interac debit card fraud has hit a record low in Canada, down 62 percent in 2013 due to better technology, according to the group responsible for the payment network.
The Interac Association says Interac debit card fraud losses caused by so-called skimming, or the stealing of information, dropped to $7.3 million last year, down from $18.2 million in 2012.
Chip technology on bank cards—a computer chip that encrypts financial information that’s usually used in combination with a PIN password—has been making the difference, Interac said Wednesday.
“It’s choking down what the criminals can do,” said Caroline Hubberstey, head of external affairs for Interac Association.
“It’s having a significant impact, as predicted,” Hubberstey said from Toronto.
She said the $7.3 million in fraud last year in Canada was related to skimming from the magnetic stripes on bank cards.
Chip and PIN technology has been introduced in Canada on credit cards and bank debit cards within about the last four years.
Interac said while chip and PIN technology are helping to decrease fraud in Canada, the United States lags in use of the technology.
Overall fraud losses on Interac purchases, including those made outside Canada, decreased to $29.5 million in 2013 from a high of $142 million in 2009. In 2012, fraud losses were $38.5 million.
As a result of the decline in fraud, the number of Interac cardholders reimbursed by financial institutions fell to 72,200 in 2013 from 238,000 in 2009.
Technology analyst Carmi Levy said it appears that there are no known cases of hacking chip technology.
It has “literally cut the legs out from criminals,” said Levy, an independent technology journalist based in London, Ont.
“We’ve been saying for years that the old, magnetic stripe was the security equivalent of the soft underbelly of card-based security.”
Interac is also rolling out Interac Flash across the country, which allows consumers to hold their card to a reader to make a payment instantly from a savings or chequing account. This eliminates the need to insert the card or enter a PIN.
Interac is responsible for the operations of the Interac network, which allows Canadians to access their money at automated banking machines and 766,000 point-of-sale terminals.