EMV Chips Stay In Spotlight As Identity Theft Grows
Major banks and credit card companies are scrambling to issue new EMV chip with signature credit cards, even as Apple Pay is debuting. EMV credit and debit cards offer higher security and anti fraud capabilities, and have been used in Europe and South America for years, but these cards were slow catching on in America. These cards look nearly identical to the magnetic swipe cards we are all familiar with, but they contain a a secure microchip for transmitting data, and cannot be duplicated on the street by cyber criminals, unlike standard magnetic swipe cards which can be duplicated with ease.
A big part of the push for the new cards is the recent high profile data breeches, such as the ones that happened to Home Depot, Target Stores, P.F. Chang’s China Bistro Inc. and Goodwill Industries International Inc. thrift stores. The recent data breeches have exposed millions of consumers in the United States and some from Canada to potential fraud. The breech at Home Depot has seen 56 million credit cards and debit card accounts hacked, and thousands of people have already had their accounts drained. The latest possible breech of security may be grocery chain Supervalu Inc, which is investigating a potential breech that could affect shoppers at close to 1,000 supermarkets nation wide. With all of these data breeches, the push is on to totally roll out the new EMV cards and shut down the hacking fraud. It was however Target’s massive data breech has helped hasten the switch to the EMV chip and signature cards that are already widely used in Europe and parts of Africa, Latin America and Asia.
All major lenders nation wide, including banks, credit cards, and credit unions are pushing out the new cards with the computer chip with the magnetic stripe on the back. Example Eight is the latest to start sending out its customers the new EMV chip cards to new customers and old alike. Retailers are also installing new terminals in their stores which are ready made to accept the new cards. Today with the massive breeches in security lenders and retailers nationwide are both eager to roll out the new system. Walmart for example is already using the new readers at more than 4,600 locations with only about 400 more locations as yet to make the transition, which should occur by the end of the year. While it is adding a huge cost to merchants, forcing them to add the new machines to their stores, failure to do so will result in a bigger loss due to the loss of sales they will suffer should they not upgrade to the new credit card readers. The cost to lenders and retailers for converting to the new the cards and credit card readers is estimated at up to $11 billion, far less than the cost of credit card and debit card fraud yearly.
Overall, Lenders will issue more than 580 million EMV credit and debit cards by the end of 2016, but this is only about half of the credit and debit cards nationwide. EMV credit and debit cards have been in heavy circulation in Europe, Asia and Canada for years. The delay of their release in the United States has largely been due to merchants being reluctant to make the needed changes to credit and debit card readers, and until the lenders issued the new cards to consumers, while at the same time the credit card companies didn’t want to issue the cards until consumers had places they could use them at. Pretty much the delay in these cards hitting the United States was over a tug of war between Merchants and Lenders over the roll out steps.
What makes this card so secure is that each chip card sends a unique code with each transaction, which makes it near impossible to counterfeit. While breeches of stores like target could still over, the data would be useless to the hackers without the unique code, which is not stored merchant side. In the United States alone credit and debit card fraud amounted to nearly $18 billion dollars, and one third of that was due to counterfeit cards.
The new cards still have the magnetic stripe, and will for a few years until all merchants in the United states have upgraded to the new system. The EMV technology is used differently, you leave the card in the reader until the transaction is completed. You will likely be required to enter a security PIN code as well to complete your transaction. Merchants and Credit card companies alike are helping customers new to the cards get the hang of using them. Beginning in October 2016, any bank or credit union or lender that issues anything other than the new EMV chip cards or any retailer who uses old mag swipe credit card readers will be liable for any fraud that occurs with them, so chances are you will see these cards in wide use come the fall of 2016.