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18/02/2010 -
Canadian merchants using chip and pin POS terminals may be interested in knowing that UK researchers have found a relatively simple exploit in the chip and pin system, which enables fraudulent cards to be processed without a PIN code - transactions that still appear as PIN-verified. A team of computer science researchers at Cambridge University discovered that, with uncomplicated equipment, hackers could manufacture a device - which can be concealed in a backpack or briefcase during a credit card processing transaction - that communicates with the POS terminal, essentially telling it that the PIN has been authorised.
This could enable hackers to use a fraudulently copied card, or a stolen one, without knowing the actual PIN.
"We think this is one of the biggest flaws that we've uncovered - that has ever been uncovered - against payment systems, and I've been in this business for 25 years," said Ross Anderson of the Cambridge University Computer Laboratory.
However, some payment processing industry players have come to chip and pin's defense, saying that the implementation of the technology has successfully reduced fraud levels.
For example, Steve Brunswick - strategy manager at Thales Information Systems Security - told UK newspaper The Register that chip and pin is "by far and away the most secure way of protecting payment transactions currently available."
