Wow… when you think about all the dedicated and dependent hardware for traditional magnetic striped credit cards, that’s a ton of equipment and expense out there to replace. Over the next few years, though, that’s exactly what’s going to happen! Traditional credit cards are on their way out.
It took the hacking of 70 million Target credit cards during the 2013 holiday season to spur Congress into abandoning the highly unsecure magnetic-stripe cards used by most Americans and setting a deadline for the new (to the U.S., anyway) smart card technology. While Americans are just starting to learn what a smart card is, it’s been (successfully) used in other markets for more than 20 years, making the U.S. the only major market on the planet still using the swipe and sign technology.
The New Technology is known as EMV (stands for: Europay, MasterCard and Visa) – also known as smart cards. Smart cards utilize a chip and PIN or chip and signature technology as well as multiple layers of security, including an embedded chip and unique identifier, which can change at any time.
Hacking a system to gather information on a chip and creating a counterfeit credit card is complicated whereas a magnetic stripe card, data can easily be read, written, deleted or changed with off-the-shelf equipment, leading to high credit card fraud. In markets where smart cards have been deployed, losses have dropped in half and counterfeiting dropped 78%. The cost of the changeover is an estimated $35 billion, to be mainly shouldered by retailers.