The ATM issue- Did we learn a lesson, will we prevent another fraud or will we let it happen again in the future?

“Love for money is the root of an evil” is well put old saying that was further strengthen by the recent ATM fraud at Durbarmarg.  The fraud brought in outcry among general public as people started posting about the issue on twitter. The issue became the matter of troll within few hours however; the severity is way beyond imagination.

The threats to ATM security might have been just realized in Nepal, however, these issues have been happening worldwide. In October, 2017, Mexico faced a group of hackers who were replacing ATM hard wares in order to get the data of customers. In 2018, suspecting a similar incident, US Secret announced urgent warnings about the threat to ATMs as it was said criminals were planning to plant malware on ATMs.   In Europe, the number of criminal attacks tripled in 2017 compared to that of 2016. A number of ATM scandals are faced every year worldwide. Developed and developing countries have been working to resolve the issues. Although Nepal faced its ATM scandal lately, Nepalese bankers and regulators should recognize what other threats can be to ATM security and work to resolve these issues.

80% of the ATM frauds that happen worldwide include card skimming. Usually, the perpetrator attaches a fake keypad above the real keypad along with hidden cameras in order to transfer data related to the card in their own devices. Besides, jackpotting is also a new tactic that perpetrator have come up with. It involves attaching a small hole, by the side of the PIN pad, and connecting cable wire to the laptop so that the ATM dispenses all its money and empty the ATM within a few seconds. Finally, robberies near the ATM counter are equally popular. The looters wait for the customers to dispense their cash and rob them as they get out of the counters.

Nepal’s banking network is expanding very competitively. Commercial banks are continuously opening new branches and new ATM counters. All these activities are being done under the orders of Nepal Rastra Bank (NRB). While we are trying to improve the reach of banking and are promoting financial inclusion, it is equally important to concentrate on the upcoming threats that these banking accessibility can bring. The incident that took place in Durbarmarg came to the notice of authorities, however, if the same incident had happened in places other than major cities, would the authorities be able to catch these perpetrators?

Moreover, while banks are consistently installing new ATM booth every single day, it is important to understand where these ATMs are being manufactured and who are supplying these ATM boxes. Have banks done quality inspection of the ATMs that are installed in the country? Moreover, care should be equally given to the issued ATM cards. A new technology, called EMV technology is a feature introduced in cards used internationally. Nepal can also research about these technologies that can help in the prevention of such security threats.

Before even reaching to the fraudulent activities with ATM machines, Nepalese banks should think about the status of ATM centers. Many times, banks install ATMs to simply showcase the ATM booth. The problem in the ATM is so frequent that one regrets issuing ATM card from the concerned bank. Moreover, an ATM center is one of the most sensitive places where robbery can take place. So, banks can hire a security person to look after the booth. A 24-hour service tag is often labeled outside the ATM booth however; banks can’t even manage a 12 hours of security. Physical attacks can take place near the ATMs so proper fences and bars along with a security guard can prevent a lot of such misfortunes. Besides, one of the major steps to be taken by banks is to hire diligent IT personnel to work for prevention of such fraudulent cases. Lac of skilled IT human resources is the major cause behind such cyber attacks in banks.

Post the demonetization in the neighboring country India, the use of ATMs has declined by a huge number. However, the impact of this is seen among those people of the economy who fall under the bottom line of the pyramid. Indian and Nepalese banking economy is quite similar to certain extent. So, Nepal cannot even risk going completely digital at this point because we need to include the financially excluded people into the banking economy. Thus, ATM booths with proper security and ATM cards with proper quality inspection should be priority to every existing bank.

In response to the ATM fraud by Chinese, NRB announced an immediate measure that included the limit in withdraw of cash amount up to Rs 60 thousand only from earlier Rs 1 lakh per day. However, the prevention mechanism looked more like a short term precaution than a long term precaution. NRB could not even provide strict instructions to commercial banks to install tight security in their ATM centers.

Dear readers, you might have been facing some sorts of problems in your ATM booth from the concerned bank. Please let us know in the comment section so your problems can reach to a bigger mass.