A British university has identified security flaws in new chip and Pin credit cards that banks in New Zealand are about to introduce.
Chip cards are supposed to be more secure than magnetic strip cards because it is more difficult for fraudsters to copy and produce duplicate cards.
Visa said
this week that all its 2.6 million credit cards with the old magnetic swipe strip must be replaced with chip cards by 2014.
MasterCard will follow suit.
But a team from Cambridge University's computer laboratory has demonstrated that criminals can use stolen chip cards undetected and without needing to know the correct Pin, the Dominion Post reported.
Visa said it took the results of tests by the University of Cambridge seriously and would modify payment terminals.
BNZ head of fraud Ron Watt said that, unlike in Britain and France, Pin transactions in New Zealand were conducted using online payment terminals and the Pin was not stored on the card.
Visa regional manager Ian McKindley said although the attack the university set up as part of its research was theoretically possible, it would be expensive and risky to carry out with minimal financial gain.
"We will implement changes to point of sale devices to even harden it further from this theoretical attack."
- NZPA
