Saturday, June 25, 2005

Credit Card Security Codes

The latest thing to prevent credit card fraud is to ask you to enter the three digit security code on the back of the card. According to this NY Times article, only 56% of merchants use it. I'm all for whatever cuts down on fraud. However, I wonder how long this will remain useful. It will stop people who get your number off a receipt or something. It will not stop people who 1) steal your credit card 2) steal your credit card number and security code from merchants who request the security code. The only way this will work is if the merchants who require the security code do not store it anywhere. If they do store the number, in effect, all this security code does is make your credit card number longer.

I suspect it will be effective for a little while, but only while it isn't widely adopted.

1 comment:

dinesh katyal said...

Visa regulations require that the card security code cannot be stored and only be used during the transaction. Of course, not all shopping carts and merchants comply with that rule.