Butterfield Bank is rolling out new, more secure credit cards that have become standard in Europe and Canada. Butterfield is the first bank in the Cayman Islands to convert all of its credit cards to “chip and PIN.”
The new cards have an embedded microchip with the banking information and customers will input a PIN like they would at an ATM. Butterfield representatives say that the new cards will also have the traditional magnetic strip since most retailers in Cayman are not set up to accept “chip and PIN” yet.
“When using the chip card together with a PIN, it is more secure than the magnetic stripe, in that it uses cryptography to protect data when communicating with a card reader,” said Butterfield senior vice president Peter Jackson. “Chip and PIN cards used at chip-enabled terminals make the transactions even more secure by validating the card and the cardholder electronically.”
Most restaurants and retailers in Europe, Canada, and Central and South America are set up to accept chip and PIN payments. Merchants in the United States still rely primarily on magnetic strip cards but many companies are starting to convert to the newer technology.
Rory Mann, a Butterfield spokesman, said the bank is also starting to work with its business customers to convert sales terminals to accept the new chip and PIN cards. He said the bank plans to convert its merchant customers over to the new system by the end of the year.
Detective Inspector John Fahy, with the Royal Cayman Islands Police Service’s Financial Crime Unit, said the chip and PIN cards, when implemented across the system, make it much harder for “casual criminals” to commit credit card fraud.
For now, Mr. Fahy said, the new cards will mean “safer travel abroad” in places like Europe and Canada where most credit card business is done with chip and PIN systems. “This removed a whole level of criminal,” he said, who might steal a wallet or purse and use a credit card.
Credit cards an easy target
Those “casual” credit card fraud cases, Mr. Fahy said, “are not infrequent here.”
Much less frequent but well known are cases when organized crime groups come to Cayman from abroad to use stolen credit cards.
Last year, three Malaysian men were jailed for 16 months each after police caught them with 50 fake credit cards and forged passports when they tried to spend tens of thousands of dollars at jewelry stores in George Town. Late in 2014, police arrested three Romanian nationals and a Hungarian trying to run a similar scheme with cloned credit cards.
The men, who police suspect work as pawns for organized criminal networks, would buy jewelry with the fake cards, leave the country and sell the items abroad.
When sentencing the third Malaysian man in May, Justice Charles Quin called on Cayman’s banks to institute chip and PIN to prevent these types of fraud. The encrypted microchip, while not completely foolproof, eliminates the magnetic strip that thieves use to clone the cards in these types of scams.
While traveling abroad, Butterfield customers will be able to use the chip system where merchants have the correct equipment as they do in Europe or South America, which will keep their credit cards much more secure.
The familiar magnetic strip transmits the credit card number. The chip in the new cards transmits an encrypted number, making it much more difficult for criminals to get the actual credit card information if, for example, they hack into a retail outlet’s payment processing system, like they did to Target in the United States two years ago.
The PIN adds a second layer of security. If someone loses a magnetic strip credit card, anyone can pick it up and use it at a retailer who isn’t paying attention to the signature. By requiring a PIN, the card is useless without that four-digit code to go along with it.
Most merchants in Cayman do not yet have a way to accept the chip and PIN cards, and they will still need to swipe the magnetic strip. But Butterfield customers traveling abroad will be able to have better security for their credit and debit cards.
The Cayman Compass contacted several other banks to ask about potential plans for chip and PIN cards but received no response by press time.
Butterfield will start issuing the new cards for its high-end and business credit accounts this month and convert the rest of its credit and debit cards over the next 12 months.