FIGHTING FRAUD:The BNZ's Michael Turner who created the bank's new LEN technology aimed at stopping the skimming of credit cards.

A 'flu jab' for credit cards which protects them against skimming attacks has been patented world-wide by the Bank of New Zealand.

The bank announced today the results of a two-year trial of its world-first liquid encryption technology (LEN) which has reduced credit card fraud by 50 per cent for the bank’s 450,000 credit card holders.

LEN works by re-setting the information held on the card’s magnetic strip every time the card is used at a BNZ automatic teller machine (ATM). The technology has been in development at the bank since 2006, with the first trial to about 2000 customers beginning in February 2008.

Skimming is the process of accessing then cloning credit card information, most commonly through ATMs.

Often the information is held for six months to a year before it is used to access the card holder’s funds, BNZ security and fraud national manager Owen Loeffellechner said.

"Because LEN changes the card’s information each time it is used at an ATM it makes the skimmed information out of date and unable to be used to commit fraud."

Loeffellechner said the technology was a game-changer in terms of combating fraud as it shifted the emphasis from detection to prevention, and allowed the customer to actively protect themselves from fraud.

BNZ chief information officer Peter Yarrington said the bank had been pleasantly surprised by the level of success of the system since it was expanded to cover all 450,000 credit and flexi-debit card holders.

New Zealand statistics for credit card fraud are not available due to variations in bank reporting processes, Yarrington said, but in Australia each year $200 million is stolen through "payments fraud" with credit card fraud accounting for 75 per cent of these transactions.

While New Zealand’s credit card fraud rate is considered to be lower, adding another layer of protection will help to drive these sophisticated fraud rings offshore, Yarrington said.

The bank would not confirm its own credit card fraud rates, citing commercial sensitivity.

BNZ has patented the technology and other banks had expressed a “level of interest” in acquiring the technology.

The bank is also looking at applying the technology to EFTPOS systems, Yarrington said.