It is no secret the world of traditional finance is in peril. Lack of innovation for over fifty years has created a void that needs to be filled sooner or later. New payment methods, such as credit cards, are being used on the Internet en masse, without ever being designed to complete that task. Barclays bank has now admitted its debit card authorisation process can be bypassed, and they have no clue on how to fix this issue.
Whenever a consumer pays with a debit card online, it will be verified by the issuing bank to see whether or not all of the information has entered correctly. Unlike credit card payments, debit cards are not subject to verification by either Visa or Mastercard. Security tools such as Verified by Visa and Mastercard Securecode are not designed for debit card purchases.
For the consumer, this creates an interesting situation, as they will not need to authenticate with the issuing bank to complete a transaction. On the flipside of the medallion, debit cards pose a certain risk when being used online, as the payment amount for an order has to be set correctly by the merchant. While this is usually the case, Barclays customers might want to keep a close eye on their debit card statements from now on.
Barclays allegedly admitted their debit card authorisation process is not as secure as they want consumers to believe. While the bank knows this process can be bypassed, even they are baffled as to how one would pull off this “trick”. The result is quite worrying, though, as this “hack” could potentially affect any bank issuing debit cards to customers.
Furthermore, by passing the Barclays debit card authorisation process, merchants can – in theory – take unlimited sums of money from a customer’s bank account. Despite there being overdraft limits in place for customers, this “trick” would ignore this barrier and debit the money regardless. Even cancelled debit cards are not safe from this looming danger.
In slightly more positive news, the Barclays Internal Fraud Strategy Team is investigating the matter but will not make its results public anytime soon. It is not the first time card payments are faced with major negative ramifications. Just last year, Visa’s contactless debit cards could be emptied by billing in foreign currency, rather than in GBP.
This news comes at a critical point for Barclays and other major banks around the world. While quite a few traditional financial institutions have begun internal development on blockchain-based customer solutions, they might want to speed up these efforts sooner rather than later.
Major flaws affecting card payments are far less uncommon than most people would like to think, and the time has come to step up security. Whether or not Barclays or other banks can overcome those issues with blockchain technology, remains to be seen. But one thing’s for sure: Bitcoin and blockchain technology are a far more secure global payment method than card payments will ever be.
What are your thoughts on this Barclays debit card story? Have you ever experienced something similar to this? Let us know in the comments below!
Images courtesy of Barclays, Shutterstock
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