Chip and Pin Update 2
A series of hacks at two major retailers over the Christmas shopping season has so startled the U.S.retail sector that it is rushing to catch up technologically.
Magnetic stripe credit cards that are swiped at retail counters presented a security flaw that was recently exploited at Target and Neiman Marcus to steal millions of credit card numbers. In the coming years this older technology will give way to cards that have computer chip security and are enhanced with a personal identification number (PIN).
While most of the developed world and non-developed world is already using this technology,US retailers have been slow to catch up to the to using the technology. It’s a more secure payment method than the magnetic card and signature, or the magnetic card and a PIN technology. It tells the retailer you are who you say you are, and you have the ID on the card to prove it.
For more than a decade, the sheer size of the U.S. market and he billions of dollars it would cost to deploy new credit card readers at every retail establishment has created a disincentive to modernize. But the recent incidents are an indicator that fraud is rising too quickly, to simply ignore the issue.
One way to stop such fraud is the chip and pin technology, which is tantamount to having a small computer on a credit card. The card negotiates with retailers and has a unique number for every transaction, rather than one number that is repeated over with every new transaction that is initiated.
Industry experts say that the push is on to have this technology implemented through most of the US by 2020.
The EMV (Europay, Mastercard, and Visa) developed as a standard to encrypt every chip on a card differently, Since the chip encrypts data differently for each transaction, it makes it more effective in preventing fraud and the physical card is harder to duplicate than a magnetic stripe card,
While chip technology is more effective fraud deterrent than the magnetic stripe, it’s not a complete or final solution. Ironically, In countries that migrated to using the EMV chip technology, online fraud actually increased as in-store face-to-face fraud fell, which initially resulted in little to no impact in overall total of card fraud incidences.
If you would like more information on secure payment card processing, please contact the CCS Retail Systems Sales Department.