No. of Recommendations: 2
stevenjklein,

You wrote, They all have a unique identifying chip built-in to the card. It's not an RFID card, but it is unique to each card, which makes counterfeiting impossible (or at least uneconomical).

A unique ID does nothing to make a card / chip impossible / expensive to duplicate. Case in point: Your credit card number is unique.

Also, Some of them require a PIN for every transaction.

This is a good first step as long as the PIN is always required and as long as the PIN does not have to be short. But just a PIN is not enough as they can be taken through skimming or shoulder surfing.

It seems to me that the only right way to solve this is to use a cryptographic grade handshake involving a shared secret. The handshake must be able to validate the connection through a shared secret (cypher key) known only to the device and the bank without disclosing the secret over the network. This is the same type of problem found in any secure communications protocol. I don't know whether the European card standard actually solves the problem in part because I never travel to Europe...

- Joel
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