By Tay Shi'an WHAT: By the end of next year, expect all Singapore credit cards to be embedded with microchips called EMV (Europay, MasterCard and Visa standard) to prevent counterfeiting. Only just over half of Singapore credit cards have this chip now. PASSWORD PROTECTION: Starting next year, you need a one-time password sent to you by SMS when you make Internet purchases. Or you may get a security token which generates a one-time password to use - similar to those for accessing bank accounts online - before the transaction can go through. These are some of the measures banks are going to roll out to combat credit card fraud, said the Monetary Authority of Singapore (MAS). WHEN: Phased introduction starting first quarter next year. RECENT CHANGES: The Association of Banks in Singapore announced that from 1 Nov, credit card holders who lose their cards will be liable for unauthorised transactions only up to $100, provided they are not negligent or fraudulent and notify the banks as soon as they discover the loss. The New Paper looks at the announced and possible measures to battle the three main types of credit card fraud, as explained by Mr Martin Foo, sales director of secure transactions for Gemalto, a digital security company with more than 100 offices worldwide which manufactures EMV chip cards in Singapore. MAKING CREDIT CARDS MORE SECURE COUNTERFEIT FRAUD TNP ILLUSTRATION: FADZIL HAMZAH PROBLEM: Traditional credit cards with magnetic stripes are prone to being copied with skimming devices, which can even be bought through the Internet. Once the devices copy your data, a clone card can be created. SOLUTION: EMV chip cards, which store encrypted data and are much more difficult to copy than 'magstripe' cards. MAS expects full implementation of chip cards by the end of 2010. Statistics from Visa, provided by Gemalto, showed that when Malaysia converted to 100 per cent EMV chip cards by end-2005, credit card fraud dropped 95 per cent from US$5.9 million ($8.5m) in 2003, to US$0.3m in 2005. ISSUES: Cost. Chip cards cost three to four times more than magstripe cards to manufacture, said Mr Foo of Gemalto, which manufactures more than 90 per cent of EMV chip cards in Singapore at its Ayer Rajah Crescent factory. UOB, the largest credit-card issuing bank in Singapore, with more than 1.2 million credit cards in circulation, said it was one of the first banks to migrate to EMV chip cards in 2004. In a 2007 article, it said the replacement exercise for its more than one million card holders cost $12 million. OCBC's head of lifestyle credit, Ms Lynn Gaspar, said that since March last year, all renewal, replacement and new cards issued for the bank's platinum MasterCard and Visa gold card would be EMV chip cards. 'We are in the process of migrating the other card types to EMV chip cards in phases and will notify our customers due for conversion,' she said. FRAUDULENT CARD-NOT-PRESENT (CNP) TRANSACTIONS PROBLEM: Fraudsters getting hold of your credit card details (like your name, card number and expiry date), and using them to make transactions where the physical card is not needed, for example, for Internet purchases. SOLUTION: One-time password via SMS or security token. Called dynamic authentication, this is expected to roll out in the first quarter of next year. MAS said it expects dynamic authentication of such transactions to be adopted industry-wide. USE OF STOLEN CARDS PROBLEM: Thieves who steal credit cards from the customer, or through the mail. POSSIBLE SOLUTION: Some countries, like the UK and France, have moved to the chip-and-PIN system, where instead of a signature, card holders authenticate the transaction by using a PIN, like for ATM cards. In the UK, there was a 24 per cent drop in counterfeit and fraud on lost and stolen cards in 2005, after the switch. ISSUES: Mr Foo from Gemalto said that if the aim is to counter stolen card fraud, the chip-and-PIN solution is probably the most cost effective to deploy. That's because the cost of the chip is the same as the 'regular' EMV chip. Also, almost all point-of-sale terminals in Singapore already support PINs, as they come with a keypad, said Mr Foo. However, there will be costs involved - for example, IT implementation costs. Also, consumer behaviour and habits will have to change. OTHER SOLUTIONS: An MAS spokesman said some specific security enhancements should be adopted as standard industry practice, such as customer activation of new or replacement cards, transaction alerts and more intensive fraud detection systems to track customer accounts for unusual spending patterns and suspicious transactions. SPENDING ON CREDIT LAST YEAR 0.02% Singapore's card fraud level is among the lowest in the world $4.7m credit card fraud loss $25.66b in goods and services paid with credit cards 6.28m credit cards in use http://www.tnp.sg/news/story/0,4136,213103,00.html?