Home > Credit Cards > Could Your Credit Card Be Safer?

Comments 0 Comments

The aftermath of the Target data breach has continued to fuel the conversation around credit card security in the United States. A lot of people think it’s sub-par.

It boils down to technology: In the U.S., you’re accustomed to swiping a card with a magnetic stripe through a card reader, but if you’re traveling in Europe, you’ll see consumers use cards with chip-and-PIN technology. The magnetic strips date back several decades, while cards using chip-and-PIN technology emerged in Europe in the 1990s.

Chip and PIN refers to the microchip embedded in the card that communicates with the payment terminal being used by the customer, who then has to enter their personal identification number (PIN) to complete the transaction. These are also called smart cards or EMV cards (Europay, MasterCard, Visa), which are accepted at 23.8 million terminals worldwide, according to the most recent data from EMVco (fourth quarter 2012). The company says there were 1.6 billion EMV cards in circulation at that time.

Those figures don’t include the United States, because the technology is pretty much not used here. Americans can get EMV cards from some credit card companies, which is helpful if they’re traveling abroad, but the U.S. is behind the times when it comes to accepting these forms of payment. A map from EMVco shows the availability of EMV terminals around the globe, and the only dead spot is in the upper-left corner of the map: the United States of America.

The magnetic strip technology has played a large part in recent data breaches, like the one that hit Target. Hackers infiltrate payment systems to install malware on point-of-sale equipment (that box you swipe your card through at the register), which records the card information. Thieves can then sell that information, which can be used by credit card fraudsters to manufacture fake cards.

This puts consumers in a very defensive position, needing to constantly look out for unauthorized charges on their credit and debit cards. Regularly checking your online statements is an important habit to establish, along with regularly checking your credit reports and monitoring your credit scores, but it would help if there were stronger technologies fighting fraud on the front-end.

The Security Race: Hackers vs. Technology

Hackers are in the business of cracking security systems, so it’s not like chip-and-PIN technology will wipe out credit card fraud, but at the moment, such cards are considered more secure than those with magnetic stripes. Since the technology isn’t a panacea for fraud, merchants and credit card companies have paused at the price of the upgrades. First Data, a global payment processing company based in Atlanta, puts the cost of EMV cards between $2 and $4, whereas magnetic-strip cards cost about 15 cents each.

As far as the cost of upgrading POS equipment, merchants may be motivated by a deadline set by MasterCard and Visa: Starting Oct. 1, 2015, merchants must assume liability for fraudulent purchases, and if EMV cards will cut down on fraud, the cost of changing equipment could offset potential losses.

The U.S. is moving toward the smart card option, but in the meantime, you have to remain aware of current cards’ susceptibility to data breaches. Consumer security very much lies with the consumers themselves, and they must makes several things a priority.  That includes regularly checking your account activity for unauthorized transactions, as well as checking your credit reports, and monitoring your credit scores (which you can do for free using a tool like Credit.com’s Credit Report Card) for signs of identity theft.

More on Identity Theft:

Image: Nomadsoul1

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team