Oct 15 2015
No business wants to be the next victim of a credit card data hack. We are all far too familiar with the story of how Target shoppers had their credit card information stolen during the 2013 holiday season. Malware installed on payment terminals collected names, card numbers, and expiration dates for about 40 million accounts. More than 90 lawsuits were filed against Target by customers and banks for negligence and compensatory damages.
With the new EMV technology, widespread credit card thievery will become much more difficult, possibly even a thing of the past. Why? The technology these cards use makes it difficult to produce counterfeit copies.
EMV stands for Europay, MasterCard and Visa, which collaborated to adopt cards with more secure technology two decades ago. EMV cards are already used in many European countries, and fraud related to credit cards has declined dramatically as a result.
How are EMV cards more secure?
The magnetic stripes on traditional credit cards store static data. If someone copies a magnetic stripe, they can easily replicate the data over and over again because it doesn’t change. That makes traditional cards prime targets for counterfeiters.
EMV cards, on the other hand, contain a chip rather than a magnetic stripe. The authorization code for each EMV transaction is encrypted and unique. And, the microprocessor chips are virtually impossible to duplicate.
Many experts predict that it will take at least three to five years for EMV to reach full acceptance in the U.S. Some U.S. card issuers, including Bank of America, Chase and Citibank, have introduced cards with both magnetic stripes and chips to bridge the transition period.
To speed up acceptance, liability for chargebacks due to credit card fraud shifted to the party that is least EMV compliant after Oct. 1 of this year. Responsibility for a credit card data hack could be assigned to the bank that issued the card, the restaurant that accepted the card or the payment provider processing the card.
If you haven’t made the transition to EMV yet, it might be time!