TechTheDay

ATM fraud and theft are a major problem in the modern banking system. They have victimized hundreds of thousands worldwide and have illegally withdrawn billions of dollars from unsuspecting victims. A solution for these problems are sorely needed and thankfully, at least one American ATM manufacturer, Diebold, has come up with something that may greatly reduce ATM fraud problems, cases of ATM skimming in particular.

ATM Skimming

ATM skimming is a form of ATM fraud, arguably the most popular, that involves the use of a skimming device. This skimming device is a compact card reader attached to an ATM on top of the ATM’s actual card reading component. It is designed to trick ATM card holders to insert their cards on the skimming device to replicate their cards’ data. The stolen card data are then used to produce a copy of the real cards that may be used in lieu of the actual cards. PIN codes may not be obtained by reading the cards so some ATM skimming setups involve the use of cameras to record the PIN codes pressed by the card users being tricked.

ActivEdge Card Reader

ActivEdge tries to prevent ATM skimming by requiring ATM card users to insert their cards on the long edge (in contrast to the standard insertion via the short edge part of the card). According to ActivEdge’s official page, it is a “game-changing card reader designed to counteract every form of modern-day skimming.” It claims to be the industry’s first secure card reader as it renders existing card skimmers obsolete. To emphasize, it mainly relies on the change in card orientation insertion in defeating the mechanism of current card skimmers. However, this change in orientation is not its only security feature (as elaborated on the features below).

Features

The list of features of this new card reader technology includes the mitigation of internal skimming through the modification of the card reader with an encrypting read head. It tries to defeat skimming not only through the change in card insertion orientation but also through encryption. Additionally, it employs USB sniffing to get rid of card data capture and tracking. This card reader module has the capability of encrypting communication to the CPU. Moreover, AtivEdge prevents card reader substitution through a pairing mechanism. This means that each ActivEdge card reader will only work with a specific terminal and a terminal will only work with a specific ActivEdge card reader. If defrauders attempt to completely change the components that handle card insertion and reading, the terminal will cease to operate.

Is This Really the Solution?

Given all its features, ActivEdge can be considered as a good enough solution banks or financial institutions can  use to help protect their customers. However, it involves a big amount of investment. It’s uncertain if banks would be that willing to have their ATMs modified to accommodate it.  Nevertheless, the way it is designed and equipped with its set of features is not going to be easy for skimmers to defeat.

Skimming devices placed on top of the actual card readers of ATMs work because they easily obtain the card data they need as a card is swiped. With ActivEdge, the strip containing the card data cannot be instantly read by any overlaying device unless it comes with a moving strip reader to handle the reading of a card that has been inserted in a different orientation. If skimmers want to defeat this system, they will have to produce skimming devices that would most likely become bulkier to accommodate the internal moving card strip reader  and to have enough battery to power the movement of the reader.

Hopefully banks would consider investing in this technology. It’s not going to be cheap but it will protect ATM users from all sorts of card skimming. However, in the meantime, while banks are not yet able to put in place a solid system to prevent cases of ATM card fraud, let this post be a reminder for everyone to be careful in using ATMs. In addition to the risks of banks that still use Windows XP for their ATMs, card skimming is a serious threat that consumers should also be vigilant about. It’s important to not completely entrust card security to the banks or the people responsible for ATM installation and maintenance.