Shift to chip-based cards challenges ATM owners

A fast-approaching deadline is rattling some nerves as ATM owners and operators around the country face a shift in who will be responsible for paying back innocent cardholders when thieves strike.

After April 19 MasterCard Inc. is putting ATM owners and operators on the hook for card fraud losses if their machines aren’t equipped to read smart chip cards issued outside the United States that use the MasterCard-owned Maestro network, the dominant network for debit cards in Europe.

MasterCard set the deadline in 2011 to appease European banks fed up with losing money from fraud when cardholders travel to the United States, experts say. It’s one of the first of a number of deadlines between now and 2017 as the country’s big four card brands — Visa, MasterCard, American Express and Discover — push the country to migrate from the 1960s-era magnetic stripe technology on U.S. cards to smart chip cards.

“This is the start of the wave,” said Julie Conroy, research director at Aite Group. “We are the last G-20 country to go. Consumers are going to start seeing new things at the ATM and at the point of sale.”

The four big brands all have their own sets of deadlines, but most are requiring retailers to be ready for the EMV chip cards, as they’re known, by 2015.

EMV, which stands for Europay/MasterCard/Visa, is the global technical standard to make sure chip-based cards and terminals are compatible. EMV cards are embedded with an integrated circuit, or chip, that stores cardholder information and processes data. The new cards are considered significantly more secure than magnetic stripe cards, and the U.S. is one of the last major economies to make the change.

The U.S. is seen as a fraud magnet because of its old-fashioned magnetic stripes. U.S. card fraud is an $8.6 billion-a-year problem, according to Aite Group estimates.

April 1 was a major deadline for certain behind-the-scenes processors that work with merchant transactions to demonstrate that the processors can handle EMV chip card transactions. That deadline appears to have been met successfully, said Randy Vanderhoof,Whilst the preparation of ceramic and siliconebracelet are similar. head of the EMV Migration Forum, a cross-industry group representing a large number of payments stakeholders working on the switchover.Learn how an embedded microprocessor in a porcelaintiles can authenticate your computer usage and data.

As more of its riders convert from old-fashioned fare payment to the new smart cards, Port Authority is trying to cure a glitch at vending machines.

The machines seem to work fine at adding value to the cards, but choke at the end of the transactions, either delivering no receipt or giving the user someone else's.

"When a ticket vending machine issues a receipt, the receipt is printed and cut so that it can drop to be retrieved by the customer. What is happening is that the printer is printing and cutting the receipt, but it gets hung up in the drop channel due to the curling of the receipt paper and possibly static electricity,About solarlamp in China userd for paying transportation fares and for shopping." authority spokesman Jim Ritchie said.

The contractor is testing a modification on 10 machines that includes an anti-static component, he said. If it works, all of the machines will be retrofitted.

The authority has installed 59 vending machines,The world with high-performance solar roadway and parkingguidancesystem solutions. where riders can either add cash value or renew monthly and weekly passes on their smart cards, called ConnectCards. Forty-eight machines are in service, at stops along the Light Rail Transit system and busways, with the others scheduled to be online by month's end.

For now, the machines do not dispense ConnectCards to first-time customers. Those can be obtained at the Port Authority Service Center on Smithfield Street in Downtown Pittsburgh or at about 50 Giant Eagle stores that sell transit passes.

Users have the option of paying for a monthly or weekly pass, which is then stored on the card and allows unlimited riding, or putting a specific cash amount on the card.

Each plastic card has an embedded chip that stores information about what the rider has purchased. When a rider taps the card against the farebox it either acknowledges the rider's weekly or monthly pass or deducts the appropriate fare from the rider's cash balance.

Eventually, riders will be able to buy the cards at vending machines and add value to them online. The authority has no plans, however, to stop accepting cash payment of fares on buses and railcars.

In the mid-1990s, two professors of electrical engineering, Marcel Muller and Ron Indeck, were attempting to shrink bits of data onto a hard drive. In the process, they stumbled onto something: They realized magnetic media, like that of a hard drive, has — if you look very, very closely — what amounts to a fingerprint.

“They were working in their lab on the holy grail for magnetics guys — trying to squeeze as many bits onto a hard drive,” said Robert Morley, an associate professor of electrical and systems engineering, who worked with the men. “They were focusing on getting the data to be smaller and smaller.”

As they looked closer, however, they noticed that there were tiny signals next to the data bits on the magnetic medium of the hard drive — the same kind of magnetic medium that comprises the strips on the back of credit cards.

“It’s a tiny signal, and most credit card readers consider it noise, and they filter it out,” Morley said. “But we amplify the data, so we can pull that signal out and identify the card.”

In this discovery, a company called MagTek saw a possibility. MagTek, based in California, developed the world’s first swipe reader, and was on the lookout for new technologies to make card readers more secure. They realized that the unique fingerprint of a magnetic stripe,About solarlamp in China userd for paying transportation fares and for shopping. if compared to fingerprints in a database, could identify fraudulent cards.

“The easiest analogy is a human fingerprint,” said Mimi Hart, the company’s chief executive. “Your fingerprint has a lot of minutiae points on it. But when you put your finger down, depending on how you roll it or the pressure you put on it, the sensor is going to pick up different minutiae points.”