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EDITORIAL: Unprotected bank accounts
ATM skimming is a global threat and cash withdrawal machines in countries that rely on magnetic stripe technology-based debit cards, like Indonesia, are very vulnerable to the crime.
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ATM skimming is a global threat and cash withdrawal machines in countries that rely on magnetic stripe technology-based debit cards, like Indonesia, are very vulnerable to the crime. (Shutterstock/File)
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series of ATM-skimming attacks in a number of cities across the country of late show that Indonesia is a tempting target for overseas criminals, not only because of its outdated debit-card technology, but also because of woeful ignorance on the part of customers about protecting their bank accounts.
Following the latest frauds, which targeted customers of state-owned bank BRI in Kediri, East Java, last week, the police have arrested five Romanian and Hungarian nationals. Previous cybercrimes that caused huge losses to customers of two other state banks, Mandiri and BNI, also involved foreign nationals.
In fact, ATM skimming is a global threat and cash withdrawal machines in countries that rely on magnetic stripe technology-based debit cards, like Indonesia, are very vulnerable to the crime. Bank customers in ASEAN countries such as Indonesia, the Philippines, Thailand and Vietnam, where the outdated technology is still in place, are easy prey to global ATM-skimming syndicates.
The crime involves fitting a device akin to a card reader on the ATM, which copies data when the card is passed through the device. The data is then retrieved and used for fraudulent purposes.
The easiest way to counter the skimming attacks, of course, is to replace the magnetic-stripe technology with chip technology, which is less vulnerable to digital data theft. Bank Indonesia (BI) issued a regulation in 2012 that required commercial banks to gradually apply chip technology by 2016 for the sake of the security of their customers’ bank accounts.
However, the policy was not implemented as most banks complained about the cost of the new technology. The central bank finally extended the deadline for the full migration to chip technology to December 2021.
In the past, it seemed that BI, the Financial Services Authority (OJK) and the commercial banks themselves were half-hearted in adopting the new technology — at the expense of the security of customers’ accounts. Banks may cover the losses from the fraud, but a rise in the number of crimes, resulting from the failure to protect customers, will erode the credibility of our banking industry.
The arrest of ATM-skimming specialists should be a wake-up call for the banking industry to do more to protect its customers from fraudsters. The banks, for example, have no other choice but to accelerate the migration to chip technology to provide a sense of security among customers. The banks also need to improve their data-system protection and conduct regular inspections of their cash withdrawal machines.
Even if the banking industry fully adopts the new technology, it does not mean that customers will be totally safe from fraud. Criminals will always seek new ways to steal money and they will go to places where security is lax.
Educating customers on how to protect themselves from bank fraud is no less important. Their awareness of safe transactions using ATMs will minimize the crime. Both the financial authorities and banking industry are responsible for the security-awareness campaign.
