Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) have formed a cross-industry group aimed at pushing promotion of EMV chips among US banks and retailers, a security measure that the credit card companies have said must be completed by October 2015, report Aman Shah and Siddharth Cavale for Reuters.
Target breach an opportunity to drive change
EMV chips are already the norm in most of Europe and Asia, but magnetic strips (which are easier to counterfeit) are still the norm in the US. Between new devices, issuing new cards, and re-training employees, converting from one to the other is expected to cost $30 billion. Reluctance to invest in the new hardware while still recovering from the financial crisis, along with some disputes about how those costs should be split between retailers and card issuers, have caused the process to drag on. Major retailers are thought to be on track for the transition, but small and mid-sized stores are lagging behind.
But an embarrassing data breach at Target Corporation (NYSE:TGT) that affected 70 million consumers and recently forced CIO Beth Jacob to step down has made security a high priority, at least temporarily, and it seems that Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) are using the opportunity to focus people’s minds on a measure that it has supported for a long time.
They should have put a pin on it: NRF
But not everyone is happy with the plans, because they may not go far enough.
“They’re not serious about reducing fraud, unless they put a pin on,” said National Retail Federation general counsel Mallory Duncan, calling the joint proposal a ‘half-baked solution’.
The current plan is to let issuers decide whether or not to require a pin in addition to the EMV chip, but using both in tandem is much more secure than one or the other (what security experts call two-factor authentication). It’s possible to steal a person’s card and to peek at their security pin, but two-factor authentication would require thieves to do both, curbing the total amount of credit card fraud.
Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA) are probably aware that pushing through the use of EMVs in the US has been enough of a struggle that being intransigent about security pins will only make their jobs harder. Besides, once everyone is carrying an EMV card in their wallets and shops all have the appropriate hardware, making the pins mandatory is a much simpler change in policy.