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One interesting finding of your study was that 55 per cent of respondents expect U.S. card fraud levels to increase or even dramatically increase after Canada adopts chip or PIN technology. Is the argument that with the introduction of such technology committing fraud here in Canada will be that much more difficult, so criminals will go after softer targets in the U.S? Is that the reasoning?

Yes. I think that's definitely a part of it. But there's also the evidence we've see across Europe. So when the U.K. implemented chip and PIN and it slowly spread throughout Europe, fraud migrated to the closest country that hadn't yet implemented chip and PIN. [Fraudsters] were stealing data, shipping it to the closest location they could use it, and creating the cards there.

So I think it's that specific activity of the perpetrators that's migrating. People who are currently producing [fraudulent] cards in Canada will still steal the data here, but then move to the U.S. to produce the cards. It's easier to ship data across the border than it is physical cards. So with the movement of the card production facilities over to the U.S., there will be increased crime associated with those facilities – and so they'll skim more U.S.-based cards as well. Then U.S. losses will go up. If Canadian cards are used in the U.S., the Canadian banks are still responsible.

The study said that 15 per cent of banks polled issued new cards to 20 per cent of their customers. This seems like overkill – and it involves additional expenses on that part of the bank. Are there proactive ways for banks to address the issue of fraud without scaring off the customer on the on hand, and incurring huge costs on the other?

The survey really highlighted one key differentiator, and that was the ability to make real time decisions on [possible fraudulent] transactions. By that I mean while the customer is at the ATM, while they're shopping you can make a decision before the approval comes back to the unit.

So in a matter of 10s of milliseconds I can score that transaction, evaluate the risk of fraud on that, and run through a series of policy rules that dictate what action will result from that transaction. Having that ability to stop a transaction in flight would decrease fraud losses – based on the benefit of real time. If there's one technology that can reduce the curve of increase from 2008 to 2009, it's going to be use of real time detection technologies at the point of sale and at the ATM.

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