Credit card fraud down

July 2005
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Credit card fraud down

In the first quarter of 2005, total card fraud in Malaysia fell to its lowest level in five years, according to Visa Asia Pacific.


Timothy Shim
Computerworld Malaysia

In the first quarter of 2005, total card fraud in Malaysia fell to its lowest level in five years, according to Visa Asia Pacific. Visa announced that total fraud at merchant outlets in the country fell to 0.12 per cent of sales in the first three months of this year compared with 0.74 per cent over the same period five years ago.

Peter Maher, Visa Asia Pacific’s general manager for risk management, said the tremendous drop in fraud was the result of the concerted effort of its members and the Malaysian authorities to tackle the problem. “The 84 per cent reduction in total fraud demonstrates the success of recent initiatives by industry players,” he said.

Counterfeit fraud – when cardholder account data is stolen, then stored on the magnetic stripe of fake cards for use in fraudulent transactions – dropped by 87 per cent from 0.6 per cent to 0.08 per cent of sales over the same five-year period.

Currently in Malaysia, the majority of credit cards follow the Europay MasterCard Visa (EMV) standard. EMV offers enhanced security compared with magnetic stripe cards and permits secure online transactions via the Internet and mobile phones. According to Paul Wilke, director of Member Communications, Visa International Asia Pacific, “Malaysia is in fact the most advanced chip market in the Asia Pacific region”.

Malaysia is the first market in Asia to deploy high security encryption technology to defend against any attempt by fraudsters to break into telecom networks that carry sensitive account data between merchants and banks.

Commenting on the encryption technology used in the EMV chip type cards, Wilke said that “by encrypting account data at the point of use and before it is transmitted to the bank, only the intended receiver would be able to decode the data, thus preventing any attempt by fraudsters to capture credit card details and account numbers”.

Maher said that the decision by the banks and government agencies to press ahead with a national adoption of EMV chip technology had been vindicated by the sharp reduction in fraud since the start of the year.

“In the month of May alone, there were 5.2 million chip transactions made on Visa Debit and credit cards – almost 85 per cent of all transactions – making Malaysia the most advanced chip market in the Asia Pacific region. Cardholders should be assured that this new platform provides the best long term defence against counterfeit fraud,” said Maher.

“Visa facilitated the development and implementation of the encryption standard in consultation with Bank Negara Malaysia, the banks and point-of-sale terminal manufacturers. With over 60 per cent of terminals already encrypted, the job should be substantially completed by the end of the year. The long-term view taken by Visa bank members and Bank Negara Malaysia means that Malaysia will shortly have one of the most secure payment systems in Asia,” he added.

Maher also said that cardholders have a role to play in protecting themselves against fraud. Visa Asia Pacific’s web site at www.visa-asia.com/tips/using_card.shtml hosts safety tips for cardholders. Meanwhile, a guide to help users guard themselves against online theft of personal and financial information is available at www.visa-asia.com/tips/security_home.shtml.



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