By now, we have all heard of the upcoming transition to “smart chip” technology for credit cards. The U.S. is one of the last countries to move to EMV chip technology–we are in year two of a four-year plan for the migration, with a target date of October 2015 for card issuers and merchants to complete their implementation of EMV chip cards, terminals, and processing systems.
The migration cannot come soon enough for many consumers. Consider the Target breach from November/December 2013. Target said the attackers gained access to customer names, credit card/debit numbers, expiration dates, and CVV security codes. The Wall Street Journal reported the thieves accessed the data from the magnetic stripes on the back of credit and debit cards. Would this have been the case if the U.S. was already using chip technology? Experts say no.
At a recent Congressional Subcommittee hearing, Randy Vanderhoof, executive director of the Smart Card Alliance, testified about cybercrime in the U.S. In 2013, data breaches became more damaging, with one in three people receiving a data breach notification letter. This is up from one in four during 2012. The increase in cybercrime against retailers is partly due to the fact that magnetic stripe card information is valuable to hackers.
The black market price for several million card accounts stolen from the Target breach was between $26.60 and $44.80 each prior to December 19, 2013. EMV chip cards can reduce financial cybercrime by removing the economic incentive for criminals. Once we replace magnetic stripe cards with EMV chip cards, the risks of duplicated data and counterfeit credit cards will become a thing of the past.