Even though many financial institutions in the country have notyet begun to implement smart chip technology in their card issuing,an expert in card fraud has urged they start to do so.

Ann Davidson, a senior risk management consultant with CUNAMutual Group, the insurer for the majority of credit union cardprograms, urged attendees at a breakout session of the 2011ATM, Debit and Prepaid Forum in Las Vegas to go ahead and beginissuing cards with chips.

As the U.S. is one of the last countries to make the switch, itscontinued reliance on magnetic stripe technology has heightened thefraud risk, Davidson explained.

“The U.S. is a magnetic stripe fraud hot spot particularly fordebit cards, since we're among the last countries to migrate tochip technology,” Davidson said.

Criminals are using skimming devices and other sophisticatedtechnology to capture the magnetic stripe and PINs, which istranslating into a growing trend of debit card magnetic stripe andPIN fraud.

Citing a recent Nielson study, Davidson said U.S. card fraud isdouble that of global fraud. The U.S. loses 9 cents to fraud forevery $100 worth of credit and debit card transactions, while theglobal average is 4.5 cents.

“Many of the card fraud losses are occurring at ATMs, where inthe U.S., they're being referred to as “Automated Theft Machines,”Davidson told the Friday session.

The days of lone perpetrators peeking over a card user'sshoulder to obtain a PIN are long gone. Today, data breaches andskimming equipment at ATMs or at the point of sale are providingeasy money for crooks. Outdated magnetic stripe technology is anenabler, and as long as there are available victims and the thinblack line on the card is used, the fraud schemes will continue,Davidson said.

She said accelerating the deployment of chip technologies willcreate a much more secure payment environment. It will alsocontinue to move the U.S. payment infrastructure toward usingmobile payments by building the necessary infrastructure to acceptand process chip transactions that support either a signature orPIN at the point of sale, Davidson added.

Visa announced earlier this year that it would begin to support theimplementation of smart chip technology.