Banks and credit unions have to change the ways they invest in fraud prevention. What they need more of in 2011 are stronger cardholder authentication and more computing in the cloud.
"There's a real threat out there." Cybersecurity Coordinator Howard Schmidt says. "But the threat sort of follows the way we build our defenses against it, and I think those things continue to move in parallel."
An online breach, which led hackers to stored data for 110,000 credit cards, was perpetrated by the most frequent and preventable modes of attack -- SQL injection.
Gartner's Avivah Litan says emerging card-fraud schemes such as 'flash attacks' highlight the need for stronger cardholder authentication and transactional analytics.
Aite's McNelley says financial institutions will have to partner with existing innovators and vendors that specialize in mobile commerce if they want to keep up.
"What's interesting is that the criminals are now using cryptographic technology to protect the card information they steal, and that's posing challenges for detection and law enforcement," says Jeremy King of the PCI Security Standards Council.
"As more channels connect to ACH, it will become the preferred route for banks to process transactions," says Steve Kenneally of the American Bankers Association.
Understanding the contact versus contactless variables for an implementation of EMV in U.S. is the first step, says Smart Card Alliance's executive director.
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