Prepare to Have a Chip in Your Cards


The magnetic strip on your debit and credit cards may soon be replaced by a microchip, according to some new deals being made in response to the rising tide of cybercrime.

For example, banking and payments technology firm FIS said that a new licensing agreement will make MasterCard’s EMV debit solution available to all participants in its NYCE payments network.

EMV — which stands for Europay, Mastercard and Visa – is a global standard for the inter-operation of integrated circuit cards, or chip cards.

These are cards containing a sophisticated microchip that holds a wealth of account, cardholder and security data. It is to the traditional magnetic strip what a modern PC is to an abacus, security experts say.

With EMV, payment processors, financial institutions and retailers will have vastly increased security capabilities against the customer data breaches that have become all too common.

However, EMV implementation plans have their detractors in the U.S. The big complaint against EMV adoption has been cost: implementing the technology will cost billions, and financial institutions, payment processors and other groups have had an ongoing fight over who will pay for it.

Also, the U.S. plans allow for continued use of the magnetic strip. This could enable a smoother transition to EMV, since the strip cards would still work with “legacy” systems, but security experts warn that the vestigial use of the strips will negate some of the security benefits of having the chips installed in the first place.

Perhaps the biggest knock on EMV is that the technology does nothing to hamper “Card Not Present” fraud – which is a leading environment for cybercrime involving payments. These are transactions where the merchant doesn’t physically “swipe” a card – such as occurs when you buy things online.

While “Card Not Present” is another area in need of vast improvement, the fact that EMV doesn’t solve it is really not a good argument against EMV. After all, the recent, well-publicized, data breaches at U.S. retailers did involve “card present” crime – and may well have been thwarted by EMV.

What we all need is a multi-faceted approach in which all the players – financial institutions, payment processors, government regulators, law enforcement and retailers — step up to protect American consumers.


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