At the joint Smart Card Alliance annual meeting and CTST conference last week, the Smart Card Alliance Latin America (SCALA) says rapidly rising fraud rates due to skimming of magnetic stripe credit cards and shifts in fraud liability are fueling the migration of Latin American banks to smart cards based on the EMV standard.
An important change in the Latin American market is the chip liability shift program that protects the party that has upgraded cards or terminals if fraud occurs, according Kim Hangoc, vice president de Gesto de Produtos do Centro de Excelncia for MasterCard Worldwide. The program is across all of Latin America and has to do with liability for fraudulent transactions based on skimmed and cloned magnetic stripe cards.
After January 2005, if a cloned magnetic stripe from a chip-enabled card is used on a non-chip enabled merchant payment terminal, the acquirer is liable for the loss. If a skimmed magnetic stripe card is used in a chip-equipped terminal, the issuer is liable for the loss. Additionally, a domestic liability shift recently went into place in Brazil in March 2008, and is planned for October 2008 in Mexico and July 2009 in Venezuela.


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