Will the Cards Be More Secured?
Looking at the constant credit card breaches one can say that the U.S. is a place where hackers hunt credit card information. And the recent Target’s credit card hack makes us acknowledge it.
The identity theft is getting more common. That is in part because the most U.S. credit and debit cards have magnetic strip on the back of the card. This magnetic strip stores the cardholder’s name, account number, the card’s expiration date and one of two security codes.
The magnetic strips on cards are easy to generate. Thieves can capture the card information while it passes through the network during the payment process and then they can reproduce a magnetic strip and issue a fraudulent card that looks like real one.
In most countries outside the U.S., banks issue cards with digital chips. The chips hold the account information and generate a unique code every time a consumer uses the card. The cards with chips are harder to replicate so the criminals don’t even bother.
The credit card security hasn’t been enhanced so far just because no one wants to bear expenses. Banks, retailers and credit card companies each want someone else to pay the bill.
However, the U.S. credit card companies plan to replace the magnetic strips with digital chips in 2015. But that’s only a plan which may not go far.
Retailers want cards to have a chip and want transactions to require a personal identification number instead of signature. But banks want to have profits they get when a signature is needed. The higher profits prevail over the cost of fraud. The fraud banks have to pay for is small in comparison with the profit they are getting from using a less secure card.
Thankfully, customers do not bear the responsibility for fraudulent charges which are result of security breaches. But these attacks may raise costs and, as a result, fees for customers.