by Bill Hardekopf, CEO of LowCards.com
(NOTE: LowCards.com now has a special
page devoted to EMV credit cards)
For years, the United States has
lagged behind the rest of the world on moving to more secure EMV credit cards.
Consumers have not asked for them, so credit card issuers and retailers have
not made the costly switch. But the recent data thefts at Target and Neiman
Marcus that have affected millions may force that long-overdue change on the
credit card industry.
While the United States accounts for only 27
percent of the credit card transactions in the world, it is responsible for 47
percent of card fraud, according to the Nilson Report.
In the United
States, credit cards currently have a magnetic stripe that contains payment
information with a 16-digit number that never changes and is given out hundreds,
if not thousands, of times each year. It is relatively easy for a sophisticated
thief to steal this information and create a fake card.
card, named for developers Europay, MasterCard and Visa, is a regular-size
card with an embedded chip and a magnetic strip. The transaction information is
encoded differently every time, which makes it harder for criminals to steal
data and use them for another purchase. Chip and PIN is a much more secure
technology and requires the cardholder to enter a four digit Personal
Identification Number (PIN) that must correspond with information on the chip.
No personal information about your account is stored on the chip.
data breaches have been big news lately, affecting millions of consumers and
costing billions of dollars. Many analysts believe the cost of absorbing the
fraud is still cheaper than converting from magnetic strip to EMV. The cost of
adopting the technology isÂ estimated to be anywhere from $15 billion to $30
billion, but fraud only costs about 5 cents for every $100 of credit card use,
according to The New York Times.
However, Visa and MasterCard are pushing
for the change and may begin shifting liability to merchants who have not
equipped their stores to accept chip cards beginning in 2015. However, even if
if merchants take care of their end, there is no guarantee that credit card
companies will all start issuing EMV cards.
EMV cards are the standard
throughout Asia and Europe. Countries that have adopted the technology have seen
a sharp decline in credit card fraud. According to a Retail
Payments Risk Forum study, fraud losses in the United Kingdom since
widespread adoption to the EMV cards in 2004 has decreased 34
These EMVÂ cards won't protect against all bogus transactions,
but it appears they will significantly cut down on credit card fraud. That's a
move that may be long overdue here in the United States.
Hardekopf is CEO of LowCards.com,
a site that simplifies the confusion of shopping for credit cards. It is a free,
independent website that helps consumers easily compare credit cards in a
variety of categories such as lowest rates, rewards, rebates, balance transfers
and lowest introductory rates. It also gives an unbiased ranking and review for