Theft-Weary Consumers Need Retailers, Banks to Invest in Chip-Based Payment Cards

Theft-Weary Consumers Need Retailers, Banks to Invest in Chip-Based Payment Cards Computer networks must be properly defended to protect the privacy of credit and debit card accounts, and the personal information of U.S. consumers.
This shouldn’t be an argument that is put on the shelf for another few years, as the massive hacks on big retailers over the Christmas break dramatically illustrates.
The Target breach that hit the personal and financial data of at least 70 million consumers is likely the largest retail data theft ever.
The thieves used malware composed by a Russian teenager that scraped the data from card readers in Target stores. That information is mostly encrypted, but a vulnerability exists in computer networks that exposed the data long enough to become fodder for a hacker on the other side of the globe.
Such are modern-day cyber attacks, and the biggest retailers in the U.S. are not prepared for the next one.
In Europe and Canada, payment cards have smart chips installed and corresponding readers are used at retailers and other establishments, making it harder for thieves to conduct the kind of data breaches that hit Target and other U.S. brick-and-mortar businesses.
Target Chief Executive Gregg Steinhafel has called on retailers and banks to invest in chip-based credit-card technology to better protect shoppers.
But the Target CEO rejected a $40 million, three-year program that would have incorporated such technology about ten years ago.
Target’s credit-card division lobbied for the program, but top executives were more worried about the technology slowing down checkout lines and they didn’t see the marketing benefits, according to the Wall Street Journal.
Without chip-based credit and debit cards, the United States has become a favorite target of cyber thieves.
The Washington Post put it this way in an editorial this week: “More broadly, Congress must now get serious about cybersecurity. The private sector has much at stake but may not be able to cope on its own. And it is not just businesses that are under threat. Already, millions of consumers are paying the price of inaction.”
The best outcome from the Target breach and the attacks on other retailers would be for retailers and banks to work in partnership on the new technology.
The problem: banks, the payment networks MasterCard and Visa and the retailers are too busy suing each other over “swipe fees” charged for credit card transactions.
Meanwhile, consumers remain vulnerable every time they make a purchase with a payment card at brick-and-mortar stores.
“All of us have a common interest in being protected, so this might be a chance for retailers and banks to for once work together, as opposed to sue each other like we’ve been doing the last decade,” James Dimon, CEO of J.P. Morgan Chase, said last week on an earnings call.

Leave a Reply

Your email address will not be published. Required fields are marked *