Credit Card Security

Last Updated : March 16, 2016, 9:22 a.m.

In the digital age, where financial transactions have taken a shift to online, credit card security has become critical. There are options like mobile payments, and digital wallets that increase the convenience of transactions but are also exposed to security threats. This is why protecting credit card details is a must. With refined encryption and tokenization technologies, credit card issuers protect your details from prying eyes during transmission and storage. Many issuers also provide two-factor authentication. And what it does is it acts as an extra layer of security. So to complete a transaction you will have to go through a verification. Moreover, the implementation of real-time fraud monitoring and alerts enables swift detection. Below we will discuss the steps credit card issuers have taken to safeguard your card details, plus you will get useful tips on how to secure your card.

Key Components of Credit Card Security

Before you start using a credit card or while getting a new one, it is essential you know the key components of credit card security. Here we have listed down some of the common credit card protection components, so take a glance –

1. EMV chip
2. CVV
3. SMS alerts
4. Contactless payment
5. ATM PIN

Certainly! Let’s explore how each of these key components of credit card security works in real life:

EMV Chip

• How it works: The EMV chip, embedded in credit and debit cards, operates by creating a unique transaction code for each purchase. Unlike traditional magnetic stripe cards, which store static information, the EMV chip generates dynamic data that changes with every transaction. When a card is inserted or dipped into a chip-enabled terminal, the chip authenticates the transaction, making it significantly more secure than magnetic stripe technology.
• Real-life application: When a card with an EMV chip is used for a transaction, the chip generates a unique code that is valid only for that specific purchase. Even if a cybercriminal intercepts this transaction data, it cannot be reused for fraudulent purposes, enhancing the security of in-person transactions.

CVV (Card Verification Value)

• How it works: The CVV is a three- or four-digit code located on the back of a credit card. It is used as an additional layer of authentication for online and over-the-phone transactions. As the CVV is not stored on the magnetic stripe or the chip, it adds an extra security measure beyond the information visible on the card.
• Real-life application: When making an online purchase, the buyer is required to enter the CVV along with the card number and expiration date. This ensures that the person making the transaction possesses the physical card and has access to the CVV, reducing the risk of unauthorized online transactions.

SMS Alerts

• How it works: Credit cardholders can opt to receive SMS alerts for various activities on their cards, such as large transactions, international transactions, or transactions exceeding a predefined limit. These alerts provide real-time notifications to the cardholder about potential fraudulent activities.
• Real-life application: If a credit card is used for a transaction that triggers an alert condition, such as an unusually large purchase, the cardholder receives an immediate SMS notification. This allows for prompt action, such as contacting the card issuer to verify the transaction or reporting unauthorized activity.

Contactless Payment

• How it works: Contactless payment methods, such as near field communication (NFC) or radio frequency identification (RFID), allow users to make transactions by simply tapping or waving their cards or mobile devices near a compatible terminal. These transactions typically have lower transaction limits for added security.
• Real-life application: In a real-world scenario, a cardholder can make a payment by tapping their contactless-enabled card or smartphone on a compatible terminal. The transaction is swift and reduces the risk of card skimming since the card doesn’t leave the user’s possession.

ATM PIN (Personal Identification Number)

• How it works: When using an ATM to withdraw cash or perform other transactions, the cardholder is required to enter a unique PIN associated with their card. This adds an additional layer of security, ensuring that only authorized individuals can access the funds.
• Real-life application: To withdraw cash from an ATM, the cardholder inserts their card and enters their confidential PIN. The combination of the physical card and the PIN provides a two-factor authentication, making it more challenging for unauthorized individuals to misuse the card.

These key components collectively contribute to a multi-layered approach to credit card security, enhancing protection against various types of fraud and unauthorized activities in real-life scenarios.

Common Security Threats

1. Skimming – In this form of credit card fraud a device known as a skimmer is used. It collects data from the magnetic stripe of a credit card. These devices are often secretly installed on legitimate card-reading systems, such as ATMs or gas pumps, enabling to capture and cloning of sensitive information.
2. Chargeback fraud – While a chargeback doesn’t impact a credit score, habitual chargeback fraud could lead to financial instability for the credit card user. If a user consistently disputes transactions, it may indicate financial distress, potentially affecting their creditworthiness over time.
3. Online fraud – Online fraud often involves the theft of personal information, including names, addresses, and Aadhaar/PAN numbers. This stolen data can be used to open new credit card accounts, leaving victims dealing with the consequences of identity theft.
4. Phishing – Cybercriminals often impersonate reputable entities by creating fake websites, emails, or messages that mimic the appearance of legitimate ones. This can involve using similar logos, email addresses, or website URLs.
5. Counterfeit frauds – Hackers may infiltrate databases of merchants, financial institutions, or payment processors to steal credit card information in bulk. This stolen data can then be used to create counterfeit cards.

Credit Card Safety Tips

You may have plenty of choices when it comes to choosing the best credit card . However, without careful consideration, your credit card can be susceptible to misuse. Follow our safety tips to prevent unauthorised transactions.

1. Keep your Credit Card with you at all times, especially during transactions.
2. Change your PIN regularly, making it hard to guess.
3. Never share your PIN or OTP with anyone, even if they claim to be from the bank.
4. Check and authorize all Credit Card transactions through SMS alerts and monthly statements.
5. Avoid using your card on suspicious websites; check for “https://” for secure transactions.
6. Be cautious of emails or messages with links, especially if they request sensitive information.
7. Immediately report a lost or stolen Credit Card to your bank for swift action.

Conclusion

In conclusion, prioritizing credit card security is paramount in today’s digital landscape. By adopting tested safety measures, users can safeguard their finances, prevent unauthorized transactions, and navigate the ever-evolving challenges of the modern financial ecosystem with confidence and peace of mind. Stay vigilant, follow best practices, and empower yourself against potential threats for a secure and worry-free credit card experience.