Fighting Fraud: Banks, Merchants Must Align

NACS: Industries Together Can Create Stronger Card Security
The only way to improve card security is for banks and merchants to align their strategies, says Gray Taylor of NACS. "This is something that hurts both of our industries. Fraud hurts us all."Whether that means a move to the chip & PIN Europay, MasterCard, Visa standard is uncertain.

What is certain, says Taylor, a security and compliance expert for the National Association of Convenience Stores, is that card fraud is costing banks and merchants billions of dollars every year, and those losses will only continue to grow. Card-skimming is the primary culprit, and it's a crime of such epidemic proportions that not doing anything is no longer an option.

"Card fraud is a national security issue," Taylor says, adding that most global crime syndicates and terrorist groups are funded through some sort of card fraud. "We need to recognition that we are wasting billions of dollars on fraud every year - money that could be used on investments in a new payments technology."

Taylor says EMV may or may not be the answer. A move to chip and PIN technology would be costly for merchants. The average store could easily spend between $35,000 and $40,000 to upgrade POS devices and payments. "And they aren't really interested in doing that right now," Taylor says. "But we all understand that we have to make a massive change in the payments system. And we just want to do it once."

Making the right change the first time is a why meeting of all U.S. stakeholders is needed. "We need to build into the system an appropriation model of incentives and investment," Taylor says.

During this second part of a two-part interview, Taylor discusses:

  • Why merchants and banks need to invest in technology that authenticates every card transaction with dynamic account data;
  • Why a 10-year migration roadmap is the only strategy that makes sense;
  • Why the Payment Card Industry Data Security Standard has failed at preventing card fraud.

Be sure to listen to Part 1: Steps to Stop Skimming, when Taylor discusses actions merchants are taking to quash pay-at-the-pump skimming, and why fraud investments to fix mag-stripe vulnerabilities are just band-aids hiding the broken nature of the U.S. payments system.

Taylor has worked in the convenience-store industry since1963, when his family opened its first of 87 convenience stores. Taylor later founded a fuel-retailing business and a store-based consumer banking/debit system, the first service of is kind to be offered by a retailer. Since selling his retail interests, Taylor has been involved on a variety of projects, including recapitalization of a public alternative fuels company, heading global product management for several of the world's largest petroleum equipment and retail systems suppliers, and serving as vice president of research and technology for NACS.




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