David Marcus, the president of online payment processor PayPal, had his credit card details stolen while in the UK. The executive’s credit card information was skimmed and used for a shopping spree after the PayPal executive shopped in London and checked into his hotel.
Never one to miss a marketing opportunity, Marcus claims that the theft could never have occurred if he had used PayPal on his shopping trip. The payment processor is known for its security – credit card information is never shared with merchants, but stored in PayPal and used to process payments only when required.
Marcus’s credit card used an EMV chip – a type of technology designed to prevent common credit card fraud. The cards, although more secure than standard credit cards, are still able to be hacked into by thieves using technology to break into the magnetic strip on the back of a credit card.
Credit card ‘skimming’ is a common scam designed to steal information quickly in the middle of a typical transaction. Customers’ credit cards are scanned in a reader and recorded for future use during what seems like a routine transaction using a credit card for payments.
Even new secure cards can be hacked into, as many use a security chip in addition to the traditional, less secure magnetic strip. Some skimmers are installed on the front of ATM machines to read and record consumers’ credit card information while they withdraw cash or check their account balance.
PayPal is one of several online merchant services offering secure payments for its customers. The technology has been operating since the 1990s, when it was set up as a payment processor for online auction websites like eBay. Today, it is the web’s largest and most popular consumer and business-to-business payment processor.