I think the banks are totally over-engineering on this project. Simple changes could make a big difference to card abuse. Changes like.
Allow customers to have a pin that can be 4,5 or 6 digits long.
Allow customers to set daily/hourly withdrawal limits on the card. For instance, I never take out more than £20 from a cash machine, so why can't I set a limit of £20 a day or hour?. Attempts to withdraw more without speaking to the bank could result in the card being held.
In a similar vein have an upper spend limit on a credit card (set by the customer). Day to day, I doubt I have a single transaction ever exceed £50, so why can't I set this?. Then if my card is stolen, and the thief try to splurge out on a shiny new toy, they wont succeed.
Finally, if going abroad give the customers an easy way to inform the bank, we are going to be in country X between Y and Z.
Tbh. banks aren't interested in making it too difficult to splurge your money. When spending many months out of the UK, I received a bill for £1000 for a credit-card I had previous cancelled, in branch (and cut it up and handed it too them). Despite me cancelling the card, the bank decided not to.:/