Switching to Chip Cards - Maximum Protection?

Compared to much of the world, our credit card security kind of sucks.  The magnetic stripes on cards that are using to hold customer data are easily duplicated, and the signatures required can be forged with little effort, which causes all sorts of temperamental afflictions to both banks and retailers alike (and of course, consumers).

Spurred on perhaps by the increase this past year has seen in data breaches and theft of people’s personal information, the credit card industry has issued an October 2014 target date for a seismic shift over to credit and debit cards embedded with encrypted microchips.  These chips are a much stronger bulwark against cyber criminals than the stripes.

Even if this move were to go off without a hitch, however, and retailers flock to the new cards en masse (still a big if, as the total cost for overhauling the current system would cost an estimated $30 billion), it would only be a half measure.  Tom Litchford is right on the money when he says, “But in spending the $30 billion-plus it could take to replace every credit card reader in America, retailers have one overriding demand – let’s provide consumers with all of the security that’s available, not just a piece of it.”  In other words, don’t half-ass it.  Chips are only one part of the solution.  Among other beneficial steps, Personal Identification Numbers must also be deployed if true change is to be achieved.  Replacing signatures, PINs would be a number known only to the cardholder and their bank, enormously reducing the risk of fraud.

PINs are mandatory in the countries that use chip cards, thus providing an added suit of armor and not just a solitary shield.  Not to mention, more retailers currently have PIN pads than they do the new card readers.  As it currently stands in the states, however, the banks’ switch to chips is not to be coupled with PINs, which potentially waters down the whole enterprise.  Reasoning for this seems to be a matter of profitability, with executives claiming that signatures, while less safe, are at least good for the increased fees they provide (Yayyyy).  Instead, whether or not to go the PIN route, and thus provide consumers with better security overall, will be left at the discretion of the banks, on an individual basis.

Because patchworks always work so well.