Nationwide Credit Card Failure Stokes Israeli Fears of Cyber-Attacks

On Thursday, Israelis reported credit card failures across the country. While the glitch was resolved, it exposes a national vulnerability that has security officials worried

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Credit card transactions were stymied across Israel for much of Thursday. In the hours required to solve the problem, Israelis stood in line wondering whether to be just frustrated or both frustrated and a little uneasy. Security officials in Israel frequently warn that the country should expect a major cyber-attack. And readers who went online in hopes of seeing what was going on found, on the website of leading daily Haaretz, a story on the credit card problem immediately next to t: “Prepare for cyber-war, Iran’s supreme leader tells students.”

Thursday’s “glitch” turned out to be just that – a software problem reportedly caused by a faulty update that rendered the exchange rate for the U.S. dollar at zero, an amount that literally did not compute. The business journal Calcalist estimates the snafu cost 100,000 shekels ($28,500) a minute in lost business. But the only apparent harm to humans was long lines at supermarkets and gas stations among Israelis who—in the cash squeeze that forces many members of the middle class to survive on monthly bank drafts—routinely whip out a Visa card to pay for a cup of coffee.

But Israeli officials have warned that the next war might begin with just such a scene. In an October speech, Israel Defense Forces chief of Staff Lt. Gen. Benny Gantz  put “a cyber-attack on banks”  in the same category as a missile strike on Israel’s version of the Pentagon or mass attacks on a border town.

The IDF’s head of intelligence says the menace is even worse.

“Cyber defense, in my modest opinion, will soon be revealed to be the biggest revolution in the past century, more than gunpowder and the use of air power,” Maj. Gen. Aviv Kochavi, Israel’s head of military intelligence, told a security conference last month.

Reports of small scale cyber-attacks surface at least every few months in Israel. One had hackers taking over control of a massive tunnel running through Mt. Carmel into Haifa.  Another attack reportedly used Trojan Horse e-mails to breach Defense Ministry computers.

Still, the country remains better known for its success in digital security than as a target. Many of the entrepreneurial efforts that gave Israel the proud nickname “Start-Up Nation” grew out of the IDF’s elite signals intelligence Unit 8200, which doubles as an incubator for cyber-security firms. Small companies like Adallom, which Haaretz explains protects databases by accumulating behavioral data generated by users, make news by drawing venture capital based on their potential. But Check Point, which offers “uncompromised protection against all types of threats,” is at 20 years of age, the second-largest publicly traded company in Israel. And IBM paid as much as $1 billion last year to acquire Trusteer, which aims to fill gaps other security software might miss. There’s money to be made in prevention.