Even though many financial institutions in the country have not yet begun to implement smart chip technology in their card issuing, an expert in card fraud has urged they start to do so.

Ann Davidson, a senior risk management consultant with CUNA Mutual Group, the insurer for the majority of credit union card programs,  urged attendees at a breakout session of the 2011 ATM, Debit and Prepaid Forum in Las Vegas to go ahead and begin issuing cards with chips.

As the U.S. is one of the last countries to make the switch, its continued reliance on magnetic stripe technology has heightened the fraud risk, Davidson explained.

“The U.S. is a magnetic stripe fraud hot spot particularly for debit cards, since we're among the last countries to migrate to chip technology,” Davidson said.

Criminals are using skimming devices and other sophisticated technology to capture the magnetic stripe and PINs, which is translating into a growing trend of debit card magnetic stripe and PIN fraud.

Citing a recent Nielson study, Davidson said U.S. card fraud is double that of global fraud. The U.S. loses 9 cents to fraud for every $100 worth of credit and debit card transactions, while the global average is 4.5 cents.

“Many of the card fraud losses are occurring at ATMs, where in the U.S., they're being referred to as “Automated Theft Machines,” Davidson told the Friday session.

The days of lone perpetrators peeking over a card user's shoulder to obtain a PIN are long gone. Today, data breaches and skimming equipment at ATMs or at the point of sale are providing easy money for crooks. Outdated magnetic stripe technology is an enabler, and as long as there are available victims and the thin black line on the card is used, the fraud schemes will continue, Davidson said.

She said accelerating the deployment of chip technologies will create a much more secure payment environment. It will also continue to move the U.S. payment infrastructure toward using mobile payments by building the necessary infrastructure to accept and process chip transactions that support either a signature or PIN at the point of sale, Davidson added.

Visa announced earlier this year that it would begin to support the implementation of smart chip technology.