Consumers can expect changes
as stores gear up for smart cards
HACKENSACK, N.J. — Stores across the country are gearing up for the next generation of credit cards, and consumers can expect to see changes in checkout aisles and in their wallets in coming months.
The so-called smart cards — credit cards with embedded computer chips that can store large amounts of data and perform functions like encryption — are being hailed as the cure for data breaches that have hit major retailers the past year. The Target data breach in November and December, when cybercriminals stole information from credit and debit cards, as well as the email and home addresses of more than 110 million customers, has given new urgency to calls to replace magnetic-stripe cards that can easily be copied by thieves and are vulnerable to fraud.
“We are seeing a lot of reaction as a result of the publicity surrounding this and a recognition that we need to have more robust systems to keep these 21st-century hackers from compromising financial information,” said Mallory Duncan, senior vice president and general counsel at the National Retail Federation.
Banks and retailers are investing in chip-card technology in a big way. About 100 million chip cards are expected to be issued this year, but that is a tiny fraction of the 1.7 billion credit and debit cards in use in the United States. Retailers are on track to have 4.5 million chip-card readers installed in their stores by the end of this year. Chip-capable card readers can be seen in the checkout aisles at Home Depot and Kohl’s stores in North Jersey. Wal-Mart’s Sam’s Club warehouse division began issuing a Sam’s Club chip card this month, and activated the chip readers already in place in its stores.
But the National Retail Federation cautions that retailers need to make sure they are investing in the smartest ways to protect customer data.
Chip cards have been widely used in Western Europe since about 2008 and have been credited with dramatically reducing credit card fraud. They also are cited as a key reason foreign data thieves have increasingly targeted U.S. retailers in recent years.
The cards usually are described as having EMV technology — short for Europay, Mastercard and Visa, three card companies that developed a set of standards for chip-card compatibility.
Randy Vanderhoof, director of the EMV Migration Forum, said the U.S. is going through the primary shift toward EMV chip cards.
Distributed by MCT Information Services