SINCE
the 1970s, paying with plastic has been pretty standard everywhere: Customers
swiped their cards, signed receipts and took home their purchases.
But
after security
breaches at Target late last year led to the loss of personal data from as
many as 110 million customers, the financial industry is racing to adopt
technologies that will alter that decades-old ritual.
Driven
largely by security concerns, credit card companies and issuers say they are
working to make the system as consumers know it obsolete through smart chips
and advanced
computer programming.
To
many, it is about time. The roots of the magnetic strip on credit cards extend
back to World War II, ample time for thieves to learn to hack and steal those
black lines of prized account information.
Credit
card fraud totaled nearly $5.3 billion in the United States alone in 2012,
giving the industry plenty of incentive to devise a better system. The amount
lost to fraud continues to grow by 30 to 50 percent a year, according to
estimates from the Aite Group, a research company.
Efforts
to bolster card security were underway well before hackers broke into the
systems of Target, Neiman Marcus, Michaels and other store chains. But the
recent data breaches injected new urgency into adopting newer technology.
“I
think this will become a defining moment about how we in the industry think
about security,” said Eileen Serra, the chief executive of Chase Card Services.
The
credit card industry, especially in the United States, has long relied on
increasingly sophisticated analytical programs to weed out potentially
fraudulent transactions. But it has also focused on a handful of technologies
it contends will better protect customers in stores and online.
One
is placing microprocessors onto cards, a standard known as E.M.V. for its
initial backers: Europay, MasterCard and Visa. Another is known as
tokenization, a way of masking consumers’ card information over the Internet.
Read
full article at The
New York Times
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