Reference no: EM132687868

A fundamental innovation in recent years has been the development of smart cards, which have embedded microprocessor chips that store "cash" balances. When the holder of a smart card uses the card to purchase goods from a retailer, the amount of the purchase is deducted from the card and credited to the retailer. The retailer can store its digital cash in special point-of-sale terminals and later transfer accumulated balances to its bank by means of telephone links. There is no actual "cash," or "legal tender," in a smart card, just as there is no actual currency in a checkbook. Instead, the balance of funds recorded on a smart card represents a balance of funds deposited with a financial institution. Because of microchip technology, a smart card can do much more than maintain a running cash balance in its memory or authorize the transfer of funds. A smart card carries and processes security programming. This capability gives smart cards a technical advantage over stored-value cards. The microprocessors on smart cards can also authenticate the validity of transactions. Retailers can program electronic cash registers to confirm the authenticity of a smart card by examining a unique digital signature stored on its microchip.

Problem 1: Utilizing the criteria provided in the course syllabus and the discussion grading rubric, provide a posting and responses to the following question: In what ways might bank fraud be easier to perpetrate using smart cards and online banking methods instead of traditional banking