It's time for the credit industry to expedite a shift to computer chip cards. (Mark Lennihan)
In the wake of the massive Target credit and debit card numbers theft, consumers have been clamoring for a more secure method of making purchases. And retailers and credit card issuers admit there is a better card than the one currently in most American wallets.
The EMV computer chip and pin system is more secure than cards with just a magnetic strip because its technology makes it harder for hackers to steal the credit card data.
But U.S. retailers and financial firms often prefer the magnetic strips because their costs are minimal.
The conversion from the strips to chips is being rolled out slowly, and should be completed by October 2015.
We’d like to see the transition accelerated. Identity theft and loss of a person’s credit standing make this a pressing issue.
In the most recent incident, thieves hijacked credit and debit card data from as many as 40 million Target shoppers.
Under the chip and pin system, credit cards — often called smart cards — have a computer chip that requires a pin number. The pin is changed frequently, so stolen credit card numbers are harder to use.
It’s not new technology. The conversation has already taken place in much of Europe, where incidents of massive theft are much more rare.
While the United States invented computer chips, it is among the last countries to use the EMV cards.
As Ben Woolsey, director of marketing and consumer research for CreditCards.com, notes EMV technology is a countermeasure to thwart fraud and was a joint effort of Europay, MasterCard, and Visa, a global payment industry alliance.
It was developed in the 1990s and established in the early 2000s in almost every country except the Untied States.
The credit card companies, retailers and banks are finally getting on board and many credit and debit cards have both the magnetic strip and computer chip.
By 2015, credit cards are expected to have only the computer chip.
In Europe and other countries, the government has required the use of chip cards, while the U.S. government has waited for the industry to set the standard.
There are expenses to the conversion, particularly for small businesses. Nationwide, the estimated cost to change to computer chips is about $8 billion.
The cost of identity fraud, however, is $8.6 billion annually, so the conversion will be pay for itself in the first year.
As Mac Brantley, communications director for the Michigan Bankers Association says, “Any technology has a cost.
Most important, it must be accessible and affordable not to just big retailers but to the mom and pop shops.”
For the sake of the consumer safety, businesses need to make this change ASAP.