Microchip Credit Card Technology Not The Solution
Microchip Credit Card Technology Not the Solution. If you shop at Target (TGT) or Neiman Marcus, or eat at P.F. Changs, you’ve probably experienced the anguish of having your credit card information stolen. Those are only three of the most high-profile companies that have recently been the target of data breaches. While they work to re-protect their systems, the credit card industry is doing its part, too, with new cards that have microchips, which are said to be more secure than the old magnetic strip.
So, how does the chip differ from the rest?
With today’s technology, information is sent from the card machine to a store computer, then to the credit card provider. If a hacker or fraudster gets such information, they can create a fake card or use it online. At least until you disable it.
With a chip card, each transaction generates unique data, preventing fraudsters from using your card details for subsequent purchases. Read on to learn why Microchip Credit Card Technology is Not the Solution.
Stay one step ahead in the market
It sounds excellent, and it does address one of the major issues with credit card fraud. There is no silver bullet, as Carolyn Balfany, senior vice president of product at MasterCard (MA), admits in the video above.
Chip cards provide no more online security than magnetic strip cards.
Even the cards aren’t totally secure against fraud. Last year, security journalist Brian Krebs told NPR that chip cards were used in the Target breach “Simply increases the cost of doing business for the bad guys… It’s not that they can’t hack the system; it’s just that making these cards is more expensive.” Regardless, chip cards will be widely used in the United States in the near future.
If you’ve gone abroad, you’ve probably noticed that the magnetic stripe that is so common on American credit cards is rarely utilized. There are already card companies, banks, and credit unions that have made the changeover.
“It’s not going to be a quick process,” Balfany says. “What most people are unaware of is that the industry has been cooperating for approximately two years to begin to influence the migration. As a result, banks are starting to issue cards to people across the United States, and shops are starting to replace terminals.”
By October 2015, the majority of cards will have chips
For all parties involved, the main goal is to have much of the new technology in place by October of 2015. Although such a change might benefit consumers, card companies, banks, and credit unions aren’t doing so out of the goodness of their hearts. When it comes to fraud, new liability laws go into force in October 2015.
Right now, companies like MasterCard and Visa are looking into fraud responsibility. They want to figure out who is the most at blame and who will bear the financial burden. The person with the least up-to-date technology will be held liable under the new guidelines. There are incentives from banks and card issuers to get you the newest and safest cards.
By 2015, the majority of stores will only accept chip cards
Balfany predicts that by 2015, 50-60% of American cards and credit card terminals will be relocated. Many large establishments expect to be ready by October 2015, so you can swipe that magnetic strip for years.